Bankruptcy is a scary topic for most people. It’s often seen as the worst financial disaster that can befall you, but is that true? Let’s unpack the topic by going over what you need to know if you’re considering filing for bankruptcy.
What Is Bankruptcy
Bankruptcy is a court proceeding where you go in front of a judge and declare that you can’t pay your debts. The judge and the court then examine your assets and decide if they believe that to be true. If they find that there is no reasonable way for you to pay back what you owe, they’ll let you declare bankruptcy.
Once declared, bankruptcy can cease foreclosure on your house, repossession of your property, and garnishment of your wages. Creditors can’t call, text, write, or sue you after bankruptcy has been declared.
There are however certain debts bankruptcy won’t be able to clear.
What Isn’t Covered By Bankruptcy
You’ll have to find another way to manage your student debt, tax debts, and owed child support payments because bankruptcy doesn’t cover those areas. There are also specific guidelines on expensive items purchased right before filing, such as boats and jewelry. The courts may tell you that you are still responsible for those, even if you are granted bankruptcy.
Even though bankruptcy may not clear all of your debts, it can help eliminate some. That leaves you in a better position to pay back the others.
What Are The Consequences
The consequences of filing for bankruptcy fall into a few different categories. There are emotional consequences, immediate financial consequences, and long-term financial consequences.
Bankruptcy is ranked with the loss of a loved one, divorce, and the failure of a business on the emotional pain scale. The process can take quite a toll on your mental health, and that’s also something to be aware of.
Immediate Financial Consequences
As with everything else, some fees come with filing for bankruptcy. Generally, there is a filing fee of a few hundred dollars on top of your attorney fees. Attorney fees will vary depending on who you hire and where you are.
Do some research on the best lawyers available in your state. If you’re in Mississippi, you can check out your local Jackson MS bankruptcy lawyers to find an attorney who will give you a free consultation. It’s during your consultation that your lawyer will work with you to make a plan on how to best move forward with your case.
Getting an attorney is the best move to help you achieve the best overall outcome from your filing.
Long-Term Financial Consequences
There are some long-term financial consequences of bankruptcy. It can stay on your credit record for up to ten years. This means it’s a public record, and your employers, bank, clients, and a lot of other people, can find the information. This can lead to discrimination against you in some cases.
There is some protection in place regarding discrimination based on bankruptcy. However, it mostly applies to your employer and the services you receive from the government. Other forms of discrimination, such as someone refusing to rent to you, may not be legally prevented.
Protection laws may vary depending on where you are so be sure to ask your attorney for more information.
What Are The Benefits of Filing For Bankruptcy?
Despite all of the fear and hesitation surrounding bankruptcy, there are some major benefits. You will, in most cases, have a huge amount of your debt cleared. That means you no longer have to worry about paying it back. Instead, you can focus on getting your financial life back on track.
The process can also improve your personal life. Creditors won’t be calling and harassing you, and you can begin to move on and repair any damage done to your family. That can be a very freeing feeling, especially if you’ve been dealing with debt for years. You’ll be allowed to participate in your life without a cloud hanging over your head.
Bankruptcy is certainly not an easy time, but it’s also not a death sentence. Bankruptcy truly is the start of a new financial future. Through the process, you’ll be able to see where you went wrong financially and learn from your past mistakes. Now that you know a little more about what filing bankruptcy entails, you can look for professional help and make an informed decision.