10 Things You Should Know Before Filing For Bankruptcy
Crosby & Fox, Las Vegas – At its core, bankruptcy is a complex legal process that can assist individuals or businesses who are no longer able to repay their outstanding debts. However, bankruptcy is not to be taken lightly. While it gives a debtor the opportunity to wipe out their debt and have a fresh start, a debtor’s credit rating may suffer ramifications for years after a bankruptcy judgment. Every bankruptcy is unique, with each case requiring a curated approach and solution.
However, by developing a general understanding of different bankruptcy aspects, you will be more prepared to take your next step.
These are at least 10 things you should know or think about before filing for bankruptcy.
1. What Other Options Do You Have?
You may have several options available to you that will help you address your debt. Before diving headfirst into the bankruptcy process, consider exploring other recovery options, such as:
- Develop a budget. Utilize money management techniques from certified financial education standards or another reputable source to budget your basics (e.g. food, housing, insurance, healthcare, education).
- Credit counseling. Receive guidance and support on consumer credit, money, debt management, and budgeting. Even if you would like to proceed with the bankruptcy process after credit counseling, credit counseling is a requirement before you are able to file for bankruptcy.
2. Are You Eligible To File In Las Vegas?
Different types of bankruptcy filings have their eligibility stipulations. For example, when filing with Chapter 7 bankruptcy, a debtor must first pass a “means test.” The means test is essentially an analysis of a debtor’s finances conducted by an independent trustee after a debtor files for bankruptcy.
3. What Are The Different Types Of Bankruptcy?
While there are six different types of bankruptcy, the most common forms of bankruptcy are Chapter 7 and Chapter 13. Chapter 7 bankruptcy is known as liquidation bankruptcy. Under Chapter 7, people are generally able to wipe out the majority of their general unsecured debts. Chapter 13 bankruptcy, also known as reorganization bankruptcy, allows individuals to pay their debts through a repayment program while retaining their property.
4. Bankruptcy Does NOT Eliminate All Of Your Debts
Certain debts cannot be or usually are not discharged in bankruptcy. A few examples of these debts include child support, taxes, and student loans. It is not a process that will remove all debts and some entering bankruptcy are mistaken in thinking so.
For instance, it will not discharge those debts are are undisclosed in the actual bankruptcy papers filed, or for any liability as a result of personal injury or death through drunk driving, or for fines like traffic tickets and criminal restitution demands.
5. Bankruptcy May Stay On Your Credit Report For A Decade
When filing for bankruptcy, the information will stay on your credit report for a certain amount of time, depending on the chapter you file. Generally, for Chapter 7 and 13 bankruptcy, it will stay on your credit report for 10 and 7 years respectively.
6. Filing For Bankruptcy Is Not An Instant Fix
In fact, the bankruptcy process may take anywhere from four months to five years from start to finish, contingent on the chapter bankruptcy you choose to file. Anyone looking at filing for bankruptcy needs to be aware of the broad timeframe that is involved in the process.
7. Your Bankruptcy Is On Public Record
Your bankruptcy becoming public record, which means your judgment will appear on bankruptcy court databases and on your credit report, which the public has access to.
8. Your Potential Employer May Access Your Bankruptcy Records
While performing routine background checks, potential employers may have access to (with your permission) information regarding the bankruptcy. This is especially prevalent in those seeking a career in the finance industry.
9. You MUST Be Completely Transparent
Throughout the bankruptcy process, you must be completely transparent regarding your income, assets, and debts. Failure to do so may result in repercussions, such as prosecution and you can also be pursued for debts you may have considered had been ‘wiped’ under the filing.
10. Consider Hiring A Lawyer
Filing for bankruptcy can be daunting and overwhelming. Whilst it will be a great relief to have behind you, it can also be a considerable burden to deal with when considering the array of legal options open to those looking at entering bankruptcy.
Remember too that many bankruptcy claims can be quite simple and straight forward. But, equally, others can be complex and protracted. There may be business litigation or other issues and there are issues about whether you file for chapter 7 or chapter 13.
Multiple variations and complexities can arise and a competent bankruptcy lawyer can certainly help you navigage that road.
Consider hiring a lawyer to help guide you through the bankruptcy process. To learn more about whether you are eligible to file, reach out to Crosby & Fox LLC for your free consultation.
Crosby & Fox are a Las Vegas law firm specializing in bankruptcy law and its variations.