Things to know before you file personal bankruptcy

Are you having debt problem? Worked out all alternatives to bankruptcy and still

facing the risk of foreclosure or repossession? Then filing bankruptcy is possible option to deal with your debt problems. But, filing bankruptcy is not an easy task. Filing a case in court of law will not relieve you from debt; instead your case must be accepted by the judge hearing the case. For this reason, there are many things you must know before you file bankruptcy in court of law. If you are such person who is thinking to file a lawsuit then read further. Here I discuss few things that every petitioner of bankruptcy must know for smooth proceedings and for his benefit.

First, when you are going to file bankruptcy in court of law, you must first undergo credit counselling program. This is because the credit counsellor has to certify that you have no hope to repay the total debt incurred till date, so bankruptcy is the only option for you. There are many certified credit counselling services available like www.creditcardbankruptcysolutions.com that provide counselling services to help you get out of debt.

Second, you must know that when you file bankruptcy, it will remain on your credit report for at least 10 years and on public records for 20 years. This means you will find hard in obtaining credit in future. Listing bankruptcy on the credit report will drastically reduce the credit score which will impact on your future finance.

Third, for whom bankruptcy is an option? The American bankruptcy institute suggests that bankruptcy is an option for people:

Who had lost their job and bank accounts are frozen after judgments

Who have most of their debt in unsecured loans such as medical bills, credit card debt or personal loans

Who have their accounts in collection agencies calling at last updated address

Who have lawsuits filed against them by creditors

Fourth, consequences of filing bankruptcy: there are many consequences of filing bankruptcy like few banks will not allow you to open bank account with them and lines of credit will be closed in future for at least 2 years as you will be barred. It will also affect your chances of getting a better job and home on rent.

Fifth, some debts will not be discharge even after filing bankruptcy. Debts like the student loans (one that is federally managed or issued), taxes, child support etc. if your most part of debt consist of above mentioned sources then the chances of you getting out of debt is very less. Then what is the benefit of filing bankruptcy as you are not going to become debt free.

Sixth, the types of bankruptcy that you can file: There are two types of bankruptcy that you can file depending on your financial position. Chapter 13 bankruptcy allows you hold your assets with you and repay the amount of debt over a period of time without interest being accrued. Chapter 7 bankruptcy allows you to liquidate your assets and pay of the amount of debt then and there without any repayment plans

Things to know before you file personal bankruptcy

By: Jack Bronson

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