1. Your finances are subject to public scrutiny
Once you file bankruptcy, your finances become public knowledge. This can be a bit embarrassing at first, but it’s good to be open about your financial missteps. You can take this time to reevaluate your spending habits and start your life anew. If you file for bankruptcy protection, you will be required to attend a meeting with your creditors where the bankruptcy trustee can ask you questions. One of your creditors is also allowed to ask you questions. The process may make you feel uncomfortable, but it gives you a chance to explain yourself and provide understanding.
2. Failing to disclose information has serious consequences
During the filing process, make sure you don’t accidentally leave anything out, or purposely exclude information thinking you’ll be able to hide it. If you’re not completely honest with your bankruptcy attorney, they won’t be able to help you as effectively. If you are found out that you withheld debts, you may lose your bankruptcy discharge and face an FBI investigation. The penalties you may face from burying debts far outweigh the potential positives.
3. Bankruptcy discharges are personal
The bankruptcy discharge is what prevents lenders from collecting your debts, but keep in mind that it only applies to you and you alone. This means that if you have a joint loan with another co-signer, the debt will still exist even after the discharge. The co-signer is not protected under your bankruptcy discharge and the debt can still be collected from the other party. You should be especially mindful of this if you have co-signed a loan with a friend or family member and are going into bankruptcy or vice versa. You don’t want to be the one leaving, or holding, the bag at the end.
4. If you’re married, you may not have to file jointly
Considering the bankruptcy laws of your state, you may not have to file joint bankruptcy if you are part of a married couple. This is good news. Filing separately allows you to keep marital assets protected under the law, and thus maximizes the amount of assets that you get to keep. It’s also smart to spread out your filing. Filing at the same time can make the process that much more stressful and stretch your finances out even further.
5. Consider contacting an asset protection lawyer
An asset protection lawyer can work with your bankruptcy lawyer to make sure you get the most out of your bankruptcy. As mentioned about, marital assets can be protected, as well as retirement plans, life insurance policies, and several other items. An asset protection lawyer can make sure that nothing is unnecessarily lost during the bankruptcy process.
6. The bankruptcy process is long
Many underestimate how long bankruptcy can take. The average time span for a Chapter 7 filing is 4 months. This is relatively short when compared to Chapter 11 (two years or longer), or Chapter 13 (three-five years). Whichever type of filing you choose to make, just be sure to prepare yourself to last its duration. Getting a fresh start takes time, so stick to your plan and adhere to the advice given by your attorney.