Filing for bankruptcy may seem like the easy way out of debts. But before one considers this decision, the following are things to know when filing for bankruptcy.
Things to know when filing for bankruptcy
Bankruptcy affects one’s credit
Bankruptcy will wipe away anyone’s good credit history which is essential when one is borrowing money somewhere. This will be detrimental since if one is bankrupt, then they have very low chances of having their loans approved. Besides that, the worst part is that it stays on one’s credit report for ten years. One will also be expected to declare their bankruptcy to their future employers, government reports, and even their medical forms. Bankruptcy will follow one for a greater period of their life.
Not all debts are discharged
Bankruptcy is not a cure to all financial problems that one has. Some of the types of debts are not discharged when one files for bankruptcy. Such debts include child support and taxes owed back. So before one considers filing for bankruptcy, they should consider other options like going for credit counseling which will help one to go through their debt and ways of curbing the growth of the debt. One may also consider loan modification where the loans’ interest rates may be lowered or one can still negotiate for lower monthly installments. Alternatively, one can consolidate all their debts to one debt with the help of a consolidation company so that they make a single monthly payment as opposed to the several payments.
Your financial life is publicized
One should be aware that bankruptcy filings are public hence their financial life will be open to the public. One will have to seek the services of an attorney to help them with the bankruptcy filings. The court will be the one to determine the creditors who will be paid and the order as well. The names of the people in the bankruptcy court are published in the local newspapers and also online. This makes one lose their financial privacy. One should be aware of this before going ahead to file for the bankruptcy.
Bankruptcy comes with requirements and costs to be met
When one files for bankruptcy, they are subject to orders given by the bankruptcy court and their attorney. One may be forced to give their credit cards, and their spending is also controlled. One is also expected to meet the attorney’s fees which may be on a flat rate basis, or they may charge a certain percentage of the debt owed. One will pay for the legal fees before the proceedings start.
Your request may be challenged by the creditors
One should list all their debts when meeting with their attorney. One should include everything so that their request is granted. The creditors are allowed to attend the court sessions to listen and ask all the questions they may have. After sixty days from the meeting with creditors, they can file lawsuits against one to challenge the discharge so that their debts can be paid in full by the person filing for bankruptcy. One can assume they will have no debts to pay if there are no any lawsuits within the deadline given…