Expert tips on bankruptcy – When to throw in the towel

Do you have large debts that you’re unable to pay back? Are you also delinquent on your mortgage payments? Do you anticipate a foreclosure or being harassed by your creditors? If this is your precarious situation, declaring bankruptcy may be the right option for you. 

In some cases, bankruptcy can erase your debts, let you keep a safe distance from debt collectors, and also save your home. However, it can’t be denied that bankruptcy also has negative consequences. It damages your credit score and diminishes your ability to take out a loan. But when you are incapable of repaying your debts and you think it’s high time you throw in the towel, there are a few tips that you should consider. Check out what we learned after speaking with the Law Offices of Scott J. Goldenstein.  

What is Bankruptcy?

If you are unsure about what bankruptcy is, it is a legal procedure for companies and individuals who cannot pay off their debts. While it is possible to file bankruptcy voluntarily, your creditors can also request the court to order a bankruptcy. 

When you voluntarily file for bankruptcy, there are many ways in which you can do it. You can even hire a bankruptcy attorney in order to determine the best alternative for your current financial situation.

Declare bankruptcy – What happens after filing?

Now that you’re knee-deep in debt, the first question that will come to your mind is whether bankruptcy can erase all your debt. Well, bankruptcy doesn’t discharge all your debts and those which can’t be discharged are:

  • Child support or alimony
  • Injury or death caused due to impaired driving or drunk driving
  • Malicious and intentional injury to someone else
  • Income taxes
  • Student loans

As soon as you file bankruptcy, this petition will automatically ask your creditors to stop their debt collection efforts. They will stop collecting the money that you owe them when you file for bankruptcy. Here are the things that they can’t do:

  • They can’t call you for debt collection
  • They can’t foreclose or seize your home
  • They can’t repossess your vehicle

Soon after you file for bankruptcy, the case will be handed over to a bankruptcy trustee. He is actually a lawyer who will supervise your case. It is the duty of the trustee to send notices to creditors and decide on a hearing date. 

How to declare bankruptcy

In order to file for bankruptcy, you should go through a course of credit counseling so as to learn about the alternatives of bankruptcy and how to handle your money matters post-bankruptcy. 

Once this course is successfully completed, you need to submit a bankruptcy petition to the US court in the district you reside in. This petition will consist of a list of your:

  • Assets like homes, cars, bank accounts
  • Creditors and what money you owe each of them
  • Monthly expenses and your income

So, now that you’re aware of the facts related to filing bankruptcy, you should no longer hesitate to file for it. Get the help of an attorney to take the right legal steps.