For many people, just the word “bankruptcy” can be intimidating. That’s why if you are thinking of filing for bankruptcy, knowing the facts is important. Here are several important facts about bankruptcy that you should be aware of:
Fact 1 – When You File For Bankruptcy, You Usually Get to Keep Most of Your Property
If you file for bankruptcy, you do not have to lose all of your property. For example, when you file for Chapter 7 bankruptcy, your furniture, clothes, household goods, one car, and your house are usually protected and they will not be liquidated to pay your creditors.
Fact 2 – You Will Be Able to Obtain New Credit After You are Discharged from Your Bankruptcy case
Though the credit comes with pretty high interest rates, many people get offers for new credit cards soon after their bankruptcy discharge. Also, people often get car loans in only a few months after their cases are over. Likewise, though you will probably not get the best interest rate, a bankruptcy will not stop you from getting a mortgage. If you work to rebuild your credit, you may be able to get a mortgage in as little as 2 years after your case is over.
Fact 3 – Even Though the Case Will Be On Your Credit Report For 7 Years, Your Life is Not Ruined
All bad credit stays on your credit report for 7 years. Bankruptcy just stays on your credit report a few years longer. But this should not prevent you from enjoying a fresh start financially and from taking advantage of the opportunity to rebuild your credit profile. One of the main reasons why you will be able to get credit after your bankruptcy is because once your case is over, you will usually be debt free. So, in a way, banks will consider you a good credit risk because you do not have a lot of other debt and your income is free from paying the old debt.
Fact 4 – You Must Tell The Court About All of Your Creditors
Sometimes, when people file for bankruptcy, they want to leave out certain creditors. This is a bad idea and against the law. Whether it be your brother, your mortgage, or your auto lender, you are not allowed to leave out the debt. Listing a creditor does not mean that you will lose that property. So long as you continue to pay your home mortgage and/or car payment, you may retain such property under the same loan terms prior to the bankruptcy filing. You simply must list every creditor to let the court know about all of your debts.
Fact 5 – Your Spouse Does Not Have to File for Bankruptcy Just Because You Do
You can file for bankruptcy alone, even if you are married. If your spouse does not want to file and you do, that is OK. When you file for bankruptcy without your spouse, only your debts will be discharged. If you and your spouse hold debts jointly, your spouse will still owe those debts even after you have filed bankruptcy. But, your spouse’s credit should not be damaged as a result of your bankruptcy.
Fact 6 – Sometimes, You Can Discharge Taxes in Bankruptcy
In some limited circumstances, bankruptcy can wipe out your back income tax debts. Certain federal income taxes debts can be discharged by filing for Chapter 7 bankruptcy, but only if you meet certain requirements. Speak to an experienced bankruptcy attorney to find out if and how you can qualify.
Contact an Experienced Bankruptcy Attorney Today
Yes, bankruptcy can sound intimidating. But, with the right advice and guidance, you can navigate the process successfully and come out on the other side with a fresh financial outlook. If you are thinking about filing for bankruptcy and want to learn more, contact an experienced bankruptcy attorney today for a free, no-obligation consultation.