Personal Finance Aug 18, 2015 09:13 AM EDT

Things Your Lawyers Won't Reveal To You about Bankruptcy Filing

By Staff Writer

Bankruptcy has been a part of every business even an individual's life and most of the time is hard to avoid.  Generally, seeking the help of a bankruptcy lawyer as one declares bankruptcy would definitely ease the burden. 

Bankruptcy is a legal proceeding whereby a business or an individual declares the inability to pay back debts.  It also allows individuals or businesses to either restructure their debt which is payable within a payment plan or have their debts vindicated.

Before asking the assistance of an attorney, you have to come clean yourself.  Gather all of your past due bills and write down all of your regular monthly and annual bills and then make a list of all your assets.  These include your investments (including retirement funds), cars, real estate, savings, and other valuables.  The reason for this is to figure out if your liabilities are higher than your estimated assets.  If this is so, then you may declare bankruptcy.

However, there are some things that your lawyers won't tell you about filing bankruptcy.

If you file bankruptcy, it will stay in your credit report for years.  In case of Chapter 7 bankruptcy, it may take about four to six months for completion and excuse from more debts.  But that doesn't mean that your issues will be solved.  It will stay on your credit report like a scar for many years and will ruin your ability to acquire credit in the future.

Bankruptcy filing is a public domain which means it becomes public record that will broadcast your name and other personal details to appear in court records that the public could access.

It will not eliminate all of your debts.  It can rid unpaid income tax bills which are more than three years old, however if you are not paying for more recent taxes, you need to pay cash.  Moreover, your student loans will not escape.

Bankruptcy should not be taken lightly.  There are thousands of people who emerged from bankruptcy with flying colors, but it is very important to be aware of all the benefits especially the risks.  Do not be taken by surprise of what bankruptcy could mean in the long term.  

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