Many debtors usually assume that bankruptcy filing is easy. There are certain issues that need to be considered before filing for bankruptcy. Failure to evaluate these issues might lead to regrets later on. Some of the important issues that need to be considered are given below:
Timing
In the event that the debtor is threatened with foreclosure or utility shut-offs, they need to file for bankruptcy quickly to stop these activities. In other situations such as a medical condition or job loss, it is best to wait till the situation stabilizes, that is, you either get cured or get a new job before filing for bankruptcy protection. This will ensure that all your debts get forgiven or re-organized.
Factors Against Bankruptcy
When considering filing for bankruptcy, the debtor must clearly understand the negative consequences that arise from taking this step. Firstly, the debtor will lose non-exempt assets such as family heirlooms. The credit rating of the debtor is affected, which implies that the debtor will not be able to obtain loan-cost credit. However, if the debtor has already been making late payments and skipping payments, the extra negative effect on the credit history will be minimal.
The fact that you filed for bankruptcy will be in the public records. Filing for bankruptcy itself is expensive – there are mandatory fees to be paid, attorney fees, and counseling class fees. If you are very deep in debt, you might qualify for low-cost or free legal aid. In some situations, the court will let you pay the court fee in installments. These options should be explored before you decide to file for bankruptcy protection.
Eligibility Criteria
In the event that a debtor wants to file for bankruptcy, they must qualify to do the same. They need to show that their expenses and income are at levels that ensure that they will be unable to repay the loans they took.
Co-signers Are Unprotected
When a debtor files for bankruptcy protection and succeeds, the co-signer is left holding the entire debt. This can lead to unpleasantness and other more serious consequences for your relationships.
Consult a Lawyer
Most attorneys specializing in bankruptcy laws will not charge you for the initial meeting. Consulting a lawyer to explore all the legal options available to you and their consequences will help you decide if bankruptcy filing is the best course of action for you. As the first consultation is free, you can safely use the services of a lawyer without incurring extra expenses.
