Bankruptcy Facts - Don’t Be In The Dark

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At the time, it may seem like the worst thing ever to be filing bankruptcy forms, although there are worse fates. What if you’ve finally accepted that you have no other options and your bankruptcy petition gets rejected because you failed to follow proper protocol or you misunderstood the process? Before you file, be sure to get the bankruptcy facts so you don’t make any of these errors.

First, let’s take a look at the most basic bankruptcy facts and what filing bankruptcy forms can and can’t do for you. Consumer law allows you the ability to legally eliminate most — if not all — of your debts through a bankruptcy discharge. This includes all credit cards, medical/hospital bills and some personal loans. If your car has been repossessed or your home in is foreclosure proceedings, court bankruptcy forms will put a stop to these actions. You’ll be able to stop wage garnishment, utility shut-offs and debt collector harassment as well. However, bankruptcy can’t completely absolve a car loan, a student loan or a mortgage payment. It cannot discharge alimony payments, child support payments, criminal fines, IRS tax debt or court restitution orders. Filing for bankruptcy cannot save you from debts you incur after the initial filing and cannot protect your spouse or cosigner.

Another one of the bankruptcy facts you should know is that filling out a few online forms cannot help you if the same problems that got you into that mess are still there. Bankruptcy may give you a clean slate for past debts, but you will not be protected from any debts you incur after your petition has been sent in. So if you got into a world of credit card debt and you’re still using credit cards, then you will find yourself in an even worse position. If credit was the problem, then you should stop using your cards before filing. If unemployment was the problem, then you should try to get some money coming in before you file a Chapter 13 (unless you wish to declare “no assets”). If medical bills were the problem, make sure you won’t need any other major procedures or you’re out of the hospital first. Before you file, consumer law states that you must meet with a credit counselor affiliated with the NFCC or AICCCA regarding your other options.

Now that you know the basic bankruptcy facts, you can decide if this option is for you. For many Americans, a clean slate is necessary to escape the burden of medical bills, poor credit decisions or impending foreclosure. Before you jump headfirst into something that will remain on your credit history for 10 years, you should meet with a nonprofit credit counselor or legal professional to discuss new forms for debt management, debt consolidation, debt settlement or a renegotiation of loan terms before you declare bankruptcy, which should be viewed as a last resort.