If you are having a tough time financially and are considering filing for bankruptcy, there are some things that you must understand about what it can and cannot do for you. If you are in the dark about the specifics of bankruptcy filing, here are 3 must-know facts.
Bankruptcy Only Wipes Out Certain Debt
Do not file and expect all debt to be wiped out. Bankruptcy can help you do such things as stop an eviction and wipe out unsecured credit card debt, but it cannot help you with things like child support or alimony. You are also responsible for debt that has been accrued as a result of taxes. Of course, all situations are handled differently, but just be prepared for some debt to potentially remain after your bailout.
You May Be Required to Pay Back Creditors Over Time
It is often a good idea to hire a bankruptcy attorney Dowagiac MI, since not all bankruptcy is the same. Depending upon which type of bankruptcy you file for, you may still be responsible for some debt over a fixed period of time. Chapter 13, for example, is considered “reorganization” bankruptcy and simply allows you more time and a payment plan to reimburse creditors what you owe.
Bankruptcy Will Affect Your Credit
Though your credit cards and other debt will technically be paid off, filing for bankruptcy will affect your credit score drastically. It can stay on your report for up to 10 years and can completely knock out your decent credit score, so this choice should not be made lightly. You are also required to report any filings to potential employers and on all official paperwork.
Filing for bankruptcy can seem like an easy way out, but be careful. Ensure that you truly understand the process and repercussions before you take the leap.