What To File For Bankruptcy? 5 Things To Understand Before Filing
If your financial situation is stressing you out, it may be time to consider filing for bankruptcy. Filing for bankruptcy can help stop your creditors from harassing you and give you some space to get in control of your finances again.
#1: You Need Credit Counseling
If you are thinking about filing for bankruptcy, you will need to go through credit counseling. There are approved credit counseling agencies that you can undergo credit counseling with. This is something you will want to take right away, as it will allow you to move forward with your bankruptcy case. You can even take credit counseling courses before filing for bankruptcy.
#2: Leave Your Retirement Account Alone
Your retirement account will not be touched during the bankruptcy process; it is a protected asset. The courts don't want to take away your ability to provide for yourself during your retirement years. You shouldn't access your retirement account to pay off your debt before filing for bankruptcy. Leave your retirement accounts alone. Touching your retirement accounts will harm your future.
#3: Bankruptcy Can Leave You with Some Debts
Third, it is essential to understand that a few debts can't be cleared in the bankruptcy process. In general, you can't get student loans discharged. With student loans, you need to prove you have undue hardship to get them discharged.
If you have secured debt and are connected to collateral, the creditor can collect the collateral, but the debt associated with that loan can be removed.
#4: Some Property Is Exempt
When it comes to paying off your debt, you will lose non-exempt property that could help pay down your debt. However, you are not going to lose any exempt property. What exactly is exempt can vary by state, but generally includes things such as a personal vehicle and a set amount of value.
#5: Bankruptcy Isn't Quick
Next, it is essential to remember that bankruptcy isn't an instant process. With Chapter 7 bankruptcy, it can take months for the process to be completed. With Chapter 13 bankruptcy, the entire process from start to finish takes several years.
If you have more questions about bankruptcy law, you should talk to a bankruptcy attorney who can provide you with more insight about what to expect. They will help you understand what debts will be forgiven, and what debts may remain. They will help you prepare for the process.
