The word “bankruptcy” tends to strike fear into our hearts, especially if we are experiencing financial problems. But most people don’t see themselves declaring bankruptcy. It seems that the process is made for bankrupt companies, government agencies and other organizations. But personal bankruptcy laws exist to protect citizens who find themselves struggling with severe debt. If your finances fall into the red zone, the following steps will help you recover:

assess the damage

Take a close look at your financial picture. If you owe large sums to multiple creditors, if collectors are calling your house, or if you find yourself paying for essential items with a credit card, you should start to consider remedying your situation. Start by counting your financial assets: bank account balances, retirement funds, stocks and bonds, real estate, vehicles, and anything else of value. Once you have a grand total, compare it to the amount you owe. If your assets are worth less than your total debts, you should seriously consider filing for bankruptcy.

How do I present?

You may voluntarily file bankruptcy as soon as you determine it is necessary. Alternatively, your creditors can force you to file a return. Regardless of how your legal process originates, do not attempt to navigate it alone. Get in touch with bankruptcy attorneys who will take a close look at your circumstances and advise you on how to proceed. There are two different claims you can bring, so an attorney will help you determine the legal route that best suits your interests.

Filing a Chapter 7 Claim

A Chapter 7 claim is fairly straightforward. If approved, this claim liquidates your assets and uses them to pay off a large portion of your debt immediately. In other words, you convert most of what you own into cash and then distribute this cash to your creditors. It sounds scary, because you lose most of your possessions. But it’s not the end of the world: Many people recover and rebuild their assets without all that debt holding them back. Especially with trusted bankruptcy attorneys on your side, this process can lead to a much-needed fresh start.

Filing a Chapter 13 Claim

Since they involve the seizure of most of the filer’s property, Chapter 7 claims are not great for people who own important businesses, property, and other assets. When you have large pieces of property that you don’t want to lose, a Chapter 13 claim is the best option. It allows people with steady and predictable annual income to pay off their debts within a three to five year grace period. Once a judge approves a Chapter 13 claim, creditors must stop contacting the debtor. The debtor then continues to work, paying his debts to the best of his ability during the grace period. No assets or other assets are liquidated in this process.

Bankruptcy attorneys will tell you: Filing isn’t all that scary, and it can drastically improve your situation. If you let unpaid bills pile up and try to ignore them, know that you can look into legal options to ease the stress of debt and protect what you own.