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McCloud Law Group Legal Blog

Wednesday, March 28, 2018

Factors to Consider Before Bankruptcy

Factors to Consider Before Bankruptcy 

Filing a petition for bankruptcy protection is a major decision that will have a huge impact on an individual’s financial future. There are many factors that a person has to consider before making that decision. These are some considerations to take into account.

  • It will take 7 to 10 years for the bankruptcy to be removed from the filer’s credit history.
  • The most common reasons for bankruptcy are divorce, unemployment, and excessive medical bills, but none of these are necessary to declare bankruptcy.
  • Filing will halt all collection efforts, including letters, phone calls, and lawsuits, through a process known as the automatic stay.
  • Depending on the chapter of the bankruptcy code under which relief is sought, the result will either be the discharge of debt, or the consolidation of the debt into a manageable monthly payment.
  • Secured debts,  that is, debts that are tied to an asset like a car loan or mortgage, cannot be discharged.
  • Many assets may be liquidated in order to pay off debts, but some assets will be exempt from collection.
  • Not everyone qualifies for bankruptcy protection; petitioners must meet income requirements.
  • Costs for bankruptcy attorneys and filing fees vary from region to region. Low-cost legal services are available for those who qualify.
  • Where a petitioner shares a debt with another party, such as an ex-spouse, the other party remains liable for the debt, even if it is discharged.
  • Bankruptcy petitioners are required to take a 90-minute course on financial management. The course is available online.
  • The bankruptcy petition and subsequent order is a part of the public record and can be found by anyone searching for it.
  • Not all debts will be discharged in a bankruptcy. Some debts, such as student loans, support payments, certain tax debts and many other debts are exempt from discharge in a bankruptcy.
  • An individual’s decision to declare bankruptcy cannot lead to negative action from a governmental entity or a private employer. This means that a public utility cannot refuse service, a student loan cannot be denied, and a petitioner cannot lose his or her job as a result of filing for bankruptcy protection.

By engaging the services of an experienced attorney, you can become familiar with these factors and ask any questions you might have.


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