Before you decide that bankruptcy is what you need, there are many things you need to consider. You are likely to already have misunderstandings of what a bankruptcy can and cannot do for you. The following are just a few things you should know about bankruptcy that you may not be aware of.
You will need to qualify for a bankruptcy
A few years back, congress decided to tighten the bankruptcy laws because they believed too many people were taking advantage of these laws to get out of the responsibility to pay back their debts. Now you must qualify, under specific rules, for bankruptcy. This will be the first thing an attorney looks at when you talk about the need for bankruptcy. You may not qualify for a complete or nearly complete discharge of your debts under a Chapter 7 filing, but there is also a Chapter 13 bankruptcy that reorganizes your debts, so you can pay a certain percentage of them off.
You may have debts that do not qualify for bankruptcy
This comes as a surprise to many people, but there are many debts that are not eligible to be discharged under bankruptcy laws. Among the most important are taxes and college loans. Your back taxes will always need to be paid, even in death, as your heirs will have to pay them out of any wealth left to them. And bankruptcy will offer no relief from the burden of college loans, except under extraordinary circumstances. A lawyer can go over any other debts that may apply in your situation.
You can be denied bankruptcy
A judge will have to review all of your finances and decide whether to approve your bankruptcy. It is possible that it can be denied for any number of reasons. The first is if it is contested by one or more creditors. A lawyer will have an idea of whether this is something that is likely to happen with your finances. Certain types of loans may have a higher risk of being contested. Although your bankruptcy may still be approved, it could be modified based upon the case made by your creditors to the judge.
You can learn what can be done about your foreclosure
Many people think that their home can be saved by bankruptcy, but this is seldom true. However, there are many things that it can do. It can stop the foreclosure temporarily, giving you time to plan your next move. It can also prevent fees from being charged because of the sale of the house and prevent you from being charged the difference between the sale price and the balance of your mortgage.
There are many misunderstandings about bankruptcy, so before you decide that bankruptcy is best for you, consult with a bankruptcy attorney. A bankruptcy lawyer can look over your finances and explain to you how these laws affect your specific finances.