Things Everyone Should Know About Bankruptcy

Worrying about the process is the last thing you need to do when you’re trying to balance calls from creditors, getting on with day to day life and working extra hours to try and cover costs. Declaring yourself bankrupt can be a very helpful tool in this situation if you want to restart your life and recover from debt in a responsible manner. Understanding bankruptcy and everything that comes with it is the first step to a new, debt-free life.

It’s Not a Fast Process

Being inexperienced within bankruptcy court is absolutely fine and very common, once someone has been through the process, they often make it their life goal to continue in a debt-free manner so they never have to revisit the process again.

Many people think that bankruptcy will happen in a similar way to small claims court, which in most cases will be over in one day. This is not the case and can differ when filing for different types. Chapter 7 bankruptcy is the most common for individuals and will often last anywhere from four to six months. Chapters 7 and 11 will last longer, often lasting anything up to five years.

You Need to Be Honest

When it comes to filing for bankruptcy, you need to be completely honest with yourself, and your friends and family. Not only does this make the process easier for you and your family to deal with, but it also fairs well in court as they have now taken a stance that only honest debtors can be relieved of all debt. Being honest with yourself is important as it will help you deal with the situation you’re facing, but being honest with the court means you have to list everything you own that could be used to liquidate, failing to do so can result in your bankruptcy claim being ended and investigated by the FBI.

It’s Complicated

There’s no getting around the fact that this process is a complicated one and requires attention and understanding throughout. The forms contain in-depth questions about your finances and require you to be accurate when completing them. If there is anything you don’t understand then you need to give yourself time to read through a detailed description of the bankruptcy process and how it will affect you and your livelihood. Being prepared in this situation will help you with completing forms accurately and making the process as stress-free as possible. You might want to hire a specialist at this time, you don’t want to make a mistake that will cost you even more money or in the worst case find yourself facing jail time.

It’s Not Cheap

Despite the fact you’re filing for bankruptcy, meaning you’re in financial trouble, this process is not a cheap one and will end up costing you money. How much will usually depend on the attorney you’ve hired and if they can do any pro work or end up waving your fee. Rough estimations suggest that filing for bankruptcy with an attorney can cost anything from a few hundred to a few thousand dollars, that’s not to say if you don’t use an attorney and sort your case yourself you won’t have to pay anything, the filing fees are still payable and are sizable.

It Will Affect Your Credit

Everyone has a credit score, and it’s what we use to judge if we are able to take out a loan or mortgage, have a mobile phone contract or use a credit card. This score is given in numbers and different things affect it in different ways. The lower your score, the less likely you are to be accepted whereas having a high score will often give you benefits when applying for a loan.

Having missed payments of any borrowed money will lower your score a little bit at a time, and running credit checks will also lower your score, which is why it’s important to think about taking out a loan before doing so.

Filing for bankruptcy will lower your score by 100 points on average and will stay on your record for anywhere up to 10 years, you will be debt-free after the process, but you will be unable to apply for any loans or credit cards for many years to come.

Understanding the bankruptcy process is essential to using it as a tool that will benefit your life in the long run, misusing it can leave you with nothing and even end up with you facing a prison sentence. Make sure you research every possible avenue and if you decide that it’s the right way to go, then understand the process. If you’re having financial trouble at the moment, then reach out to your friends and family as they are there to help, once you’ve been honest with yourself and decided you need help then you can look for legal help.