What Happens If I File for Bankruptcy?

Bankruptcy is declaring to the court, in a legal proceeding, an inadequacy to satisfy debts owed. In earlier bankruptcy cases, debtors were treated more harshly than today. It still is difficult to prove a bankruptcy case. However, the courts are more understanding than centuries ago, where harsh punishments awaited those declaring bankruptcy.

Are all Debts Forgiven in Bankruptcy?

No. Qualifying debts will be discharged as deemed appropriate by the courts. Not all debts will qualify for the limited number deemed acceptable. In Chapter 7 bankruptcy, more debts will qualify for being discharged. Still, not all will. Student loans will not be forgiven in a bankruptcy. Neither will child support, spousal support, IRS debts and similar debts.

What Will Bankruptcy do to my Credit Score?

For up to 10 years, your bankruptcy can and may be reported on your credit report. In many instances, bankruptcy might actually improve a credit score, due to certain past debts being cleared away.

How Long Does it Take for a Bankruptcy to Wear Off?

Each individual situation is different. However, as mentioned above, a bankruptcy can remain on your credit report for up to 10 years.

Where do I go to File for Bankruptcy?

Bankruptcy should be declared to the court. To file bankruptcy, one must file with the jurisdiction’s bankruptcy court. Each locale has its own bankruptcy court and filing rules. These are called Bankruptcy Code and Bankruptcy Rules. Each state comes up with its own, following accordance with the United States Bankruptcy Code.

Do I Need a Lawyer to File for Bankruptcy?

Legally, it is not necessary to have a lawyer or attorney when filing for bankruptcy. However, it may be wise to choose one, regardless, due to the sensitive nature of the situation. Also, a lawyer or attorney will be experienced and educated in the most current laws surrounding bankruptcy and this can help your case.

Sources:

“Bankruptcy,” Microsoft Encarta Online Encyclopedia 2008

“Bankruptcy Basics,” USCourts.gov

“Bankruptcy in Brief,” MoranLaw.net

“Bankruptcy FAQ,” Lawyers.com

“Declaring Bankruptcy Can Improve Your Credit Score,” SmartMoney.com