5 Things You Need To Know Before You File For Bankruptcy

Posted on: 17 July 2015

You graduated college, started a great career and got married. Unfortunately, you were faced with circumstances beyond your control and now you're deeply in debt. Your creditors are harassing you at home and at work. You've got no way to pay your bills and it looks like bankruptcy will be your only option. Before you file for bankruptcy protection, here are a few things you should know.

Some Debts Can't Be Discharged

If a good portion of your debt is comprised of student loans or back taxes, you may not benefit from bankruptcy protection. Bankruptcy laws preclude those types of bills from being discharged.

Although there are some student loans that can be discharged, there are strict rules regarding their discharge. If you have questions about your student loans, you should speak to an attorney before filing for bankruptcy. Your attorney will also be able to explain other debts that can't be discharged.

Family Bail-Out May Help

If your debt is not substantial, you may want to consider asking family for assistance. Family bail-out can help you pay off your debt so that you can avoid bankruptcy. This is particularly beneficial if you still have a reliable source of income.

If your debt is substantial, a family bail-out may still help you reduce your debt so that you don't have as much to declare on your bankruptcy.

You Shouldn't Take On New Debt

Not all debt can be discharged. If you've decided that bankruptcy is the only way to clear your debt, you shouldn't take on new debt right before you file. In most cases, your newly acquired debt will not be eligible for inclusion on your bankruptcy, which means you'll still have debt you're responsible for after your bankruptcy is discharged.

You Can't Give Assets Away

If you have assets that you want to keep, don't transfer or give them away to family or friends. Once the courts discover your hidden assets, they can demand recovery. Not only that, you can be charged with bankruptcy fraud.

Liquidate Your Own Assets

If you're going to file for chapter 7 bankruptcy protection, you may be required to liquidate your assets to pay off debt. Selling them yourself may allow you to get more money for your assets. Once you've sold them, use the proceeds to pay down some of your debt. Be sure to keep copies of receipts. You'll need them to prove the sale of assets and payment of debt.

If you're in debt, bankruptcy may be the only way to get out from under the debt you've acquired. This list will help you get through the process. For more help with understanding bankruptcy, contact a law firm like Wiesner & Frackowiak, LC.