How To Decide On Filing Bankruptcy

Bankruptcy is not a quick fix solution for making poor financial decisions in the past. Filing for bankruptcy is a major decision that will affect your financial health for the next ten years of your life. As such a big decision, the decision to file for bankruptcy should not be taken lightly. Use the following tips to plan for the bankruptcy process and decide if it is truly the best solution to your personal situation.

#1) Don't let bill collectors or debtors try to convince you that you are ineligible for bankruptcy. Debt collectors do not want you to file bankruptcy under any circumstances because it means that they will not get most (if any) of the money you owe them currently. Debtors will always tell you that you may not qualify for bankruptcy when they are given the chance. The only way to ACTUALLY know if you qualify for bankruptcy is to speak with a bankruptcy attorney or spend a ton of time and effort doing research on bankruptcy laws and qualifications.

#2) Before you meet with a bankruptcy lawyer, make a complete list of all of your assets and debts. Any assets that are not listed in your bankruptcy case can be seized to pay for your debts. Your lawyer needs to see a complete list of every asset you own to properly advise you on which type of bankruptcy is best for your unique situation. Also, you and your attorney will want to protect as many of your assets, as possible.

#3) Become fully educated about the rules of bankruptcy. If the courts were to find that you have disregarded any of the rules, your petition could be dismissed. Laws prohibit picking and choosing some debts to pay off prior to filing for bankruptcy for example. Family members cannot be paid off within one year of filing and creditors are limited to ninety days.

#4) Watch your paperwork carefully. Your lawyer will have multiple cases going on at the same time and may not be able to keep up with every little detail of your case. Be sure to carefully read all of the paperwork that you plan to file. Make sure that everything piece of information is filled out correctly.

#5) Do not go into your bankruptcy thinking that your student loans will be discharged. Only in cases of extreme hardship (read: almost never) are your student loans considered for bankruptcy. If the job you received from pursuing your degree will never allow you to pay off your debts, then you may have a small chance of getting them discharged, but it is still highly unlikely.

#6) There are free resources online that you can review. The federal government's justice department website has a number of educational resources that can answer many questions for you. This saves you some time and money with a lawyer.

#7) Be prepared to see your name publicly when you file bankruptcy. While the story probably isn't going to make front-page headlines unless you are a very prominent or famous figure, all bankruptcy cases are public record. As such, they are often reported in a small section of local newspapers.

#8) If you are trying to avoid ruining your credit by filing for bankruptcy, think again. Research the internet to find a reputable credit counseling company and see if you can dig out of your financial situation. When you find a good company, they will help you find ways to reduce expenses, work on a manageable budget, and pay-off all your debt without filing for bankruptcy.