Bankruptcy Facts

If you think filing for bankruptcy offers you a shot at debt reduction, it may, but get all the basic bankruptcy facts before you decide to go down this road. Do your research, get informed, and be proactive when dealing with this type of debt reduction option.

Below you'll find our list of facts about bankruptcy. This list will continue to grow and expand in subject matter and depth as we hear from attorneys, debtors, and creditors who have experienced a walk through bankruptcy process.

Bankruptcy Facts You Need to Know

• Mandatory filing fees ranging from $300 to $1000, depending on the section of bankruptcy code used, apply to any petition filed with the court.
• Yes, you can file for bankruptcy without an attorney. However, the process can be complicated, tedious, and time consuming with consequences for mistakes.
• You will need to supply in-depth personal and financial information to support any bankruptcy filing. It will include at least your assets, liabilities, expenses, and income.
• The vast majority of personal bankruptcies that use Chapter 7 to file their petition receive some level of relief from certain debt obligations.
• Filing for bankruptcy may be a way to temporarily stop a home foreclosure or automobile repossession. However, if you can't eventually make the payments you will likely lose the property.
• All states exempt some property from bankruptcy proceedings. This means you'll be able to keep a certain amount of cash or property.
• To file for bankruptcy you must meet certain financial qualifications. If you have little to no income Chapter 7 will likely be your only option.
• People who are trying keep their home, who have an income producing job, but are unable to make their current mortgage payment may be able to use a Chapter 13 filing to arrange a mortgage repayment plan that works for them.
• After filing a Chapter 7 bankruptcy petition you cannot file another Chapter 7 for 8 years. Shorter waiting periods apply to Chapter 13 filings.
• It is mandatory for anyone filing for bankruptcy to attend an approved credit counseling program prior to filing a petition.
• Following your bankruptcy proceeding you will likely be required to participate in a debtor education class covering budgeting, money management, and proper use of credit.
• You will not be able to discharge debt related to spousal support, child support, taxes, or student loans via a bankruptcy filing.
• The actual filing of the bankruptcy petition may or may not change your credit rating. It is highly likely that the damage has already been done prior to the filing. One thing to note, any bankruptcy filing will stay on your credit report for 10 years.
• If you are thinking about filing because you spend more than you make and can’t pay your debts, you may want to rethink that option. Filing for bankruptcy won't fix bad spending habits.
• The majority of people who file for bankruptcy do so by using an attorney. This can be very costly and these costs will not be discharged through the filing.
• A Chapter 13 bankruptcy filing may offer protection from debt collection to a loan co-signer even if they have the ability to pay the debt.

Armed with these basic bankruptcy facts, you can continue your research, and see if this is the right choice to give you some financial stress relief.