When Filing for Bankruptcy
Filing for bankruptcy is a serious matter. It affects your life and finances for several years. It is crucial to understand what happens during the process before filing in New Orleans or anywhere else. Here are five key facts to know when you file for bankruptcy:
1. Your Finances Will be Open to Public Scrutiny
Bankruptcy laws require you to fill out paperwork referred to as bankruptcy schedules. These documents list your income, assets, expenditure, debts, and other relevant information. The law also requires that you hold a meeting of creditors in public where a public trustee and creditors can ask probing questions. Even if you use a bankruptcy lawyer to try and evade this requirement, most courts will not grant your request. By filing for bankruptcy, you leave your finances open for scrutiny, which may lower your public standing in some people’s eyes.
2. Not All Debts Can be Discharged
Many people file for bankruptcy because they are unable to meet their financial obligations. A debt discharge simply means that you do not have to pay the debt and prevents creditors from taking any action against you. Types of debts that can be discharged in bankruptcy include credit card charges, medical bills, business debts, tax penalties, and others. However, some debts cannot be discharged, and these include child support and alimony, student loans, and income tax.
3. There Are Two Major Types of Bankruptcy Filings
The two most common types of bankruptcy options include Chapter 7 bankruptcy and Chapter 13 bankruptcy. Chapter 7 is also known as liquidation bankruptcy because it allows the court to sell off your property and assets to pay off your debts. Chapter 13 is referred to as reorganization bankruptcy as it allows you to complete a court-mandated repayment plan to keep your assets.
4. It Can Ruin Your Credit
Filing for bankruptcy can destroy the credit rating you have spent years building. Further, you may find yourself listed in credit bureaus for up to 10 years, which may affect your ability to borrow and gain access to other financial resources.
5. It Can be an Expensive Undertaking
Even if you are filing for bankruptcy, you still have to pay the costs related to complete the process. The major expenditure here will be lawyer fees which must be paid upfront. You will also be required to pay court fees and other costs related to processing your bankruptcy.
It is necessary to understand the process of filing for bankruptcy. When you are prepared for the outcome, it can make this difficult situation a little easier to navigate. If you still have questions, speak with an accountant or financial advisor. If you need New Orleans bankruptcy attorney or related services, you can discuss your options with our team during your initial consultation. At Stephenson, Chávarri & Dawson, L.L.C., we know what it takes to get results. Contact our office today by calling 504-523-6496 or you can send us a message via our online contact form.