Five Things You Should Know Before Filing for Bankruptcy

5 Factors that Affect Bankruptcy Filing

Bankruptcy can be a scary step, but it’s one that can significantly improve your life. If you’re thinking of filing there are several things you should know before moving forward. Arming yourself with bankruptcy knowledge can help you make the best decision about filing and enable you to manage the process as you move through it.

What are five of the most important things you should know before you file for bankruptcy?

1. Bankruptcy Chapters Affect the Outcome

In most cases, you’ll file for either Chapter 7 or Chapter 13 bankruptcy. There are other types of bankruptcy but most people won’t qualify or benefit from them. In Chapter 7, your assets are liquidated and your debts are discharged. This means at the end of the bankruptcy you’ll likely have no debts to pay unless there were any that did not qualify for discharge.

In Chapter 13, your debts are re-organized into a payment plan and you are not forced to liquidate your assets. You’ll be making payments toward your debt for three to five years.

2. Bankruptcy Affects Your Credit

One of the primary concerns people have when filing for bankruptcy is damaging their credit. It’s true, bankruptcy will have an effect on your credit, but so does falling behind on your debts. Bankruptcy negates anything positive on your credit report and it remains on your report for up to 10 years.

Though your credit might be a reason to not file, you need to examine what’s worse – years of mistakes on your credit report or one mistake that enabled you to stop the ongoing damage and move forward.

3. Your Bankruptcy is Public

Contrary to what some people might believe, when you file for bankruptcy you don’t need to make any sort of public declaration or announcement, but people can find out you filed. You’re filing official paperwork with the bankruptcy court and this information is accessible to the public. Many people in your life might not know you’ve filed, but anyone who wants to find out whether you filed can.

For more information about how anyone can access your bankruptcy information, read this article from Pocketsense.

4. Bankruptcy is Not Free

The last thing you want to do when you are facing financial turmoil is to shell out more money. Many people are surprised to learn the process of filing for bankruptcy is not free and there are even instances in which someone who wants to file will not be able to do so because of the fees. They might need to postpone filing or allow some of their existing debts to go unpaid to save money for filing.

The important thing to remember is that bankruptcy is an investment. Yes, there will be a cost initially, but it’s the first step in getting your finances back on track.

5. Discharge is Not Automatic

One of the most intimidating aspects of bankruptcy is having debt discharge called into question by creditors. Creditors are allowed to challenge your request and in most cases, they’ll be unsuccessful. As long as you’ve been honest about your assets and debts the bankruptcy court is likely to look favorably upon your request.

It’s important to note, this is one of the reasons you should be working with a bankruptcy attorney. He or she can support you through any challenges and ensure your bankruptcy goes as planned.

Bankruptcy can be one of the best decisions you’ve ever made, but the filing process can be stressful. The more you know and the more support you have the better the experience will be.

For more information or to begin the bankruptcy process, contact the Law Office of Robert M. Geller at (813) 254-5696.