5 Hard Truths You’ll Need to Accept Before Filing for Bankruptcy

Filing for bankruptcy is a nerve-wracking process that can strike fear into the hearts of even the most unshakeable debtors. Wading into the unknown of your credit’s future, coping with concerns about losing property/possessions, and stomaching the anxiety of a soiled reputation once your bankruptcy becomes public are all valid reasons most debtors avoid the entire bankruptcy process at all costs. 

While frightening, those factors should not deter you from striving toward financial security. Ultimately, the truth is, you won’t have to hand over your assets if you file for bankruptcy. Should you find yourself tumbling into questionable financial circumstances, partner with a top-ranked law firm like wH Law. By pulling in the experts, debtors can plant both feet on financially stable ground and conquer their bankruptcy fears with confidence. While having legal professionals in your corner will be a significant plus, you’ll still need to familiarize yourself with bankruptcy-filing difficulties that may cross your path. 

Filing for Bankruptcy is Expensive

While seemingly counterintuitive, the bankruptcy process in and of itself hosts an assortment of costs that can plunge individuals deeper into debt. By declaring bankruptcy, you demonstrate an inability to pay your bills, though filing for bankruptcy in the US courts costs over $300 in itself. Sadly, the fees don’t stop there. You must hire a lawyer to represent you in court, which can cost anywhere from $800- $4000. Fortunately, the money spent will be well worth it in the long run but might be cumbersome to shell out during this financially compromising time. 

Your Bankruptcy Becomes Public Domain

After filing, your bankruptcy details become public record, including your name and personal information. With your bankruptcy file accessible to the public, you run the risk of prospective employers stumbling upon this sensitive information. That said, try not to compare your situation to others and make the best out of where you are in life to make it through the bankruptcy filing process unscathed and in a positive headspace. 

It Makes Purchasing a Home More Challenging

The bankruptcy must be discharged or dismissed before you can apply for a loan. Typically, the wait time to apply for specific loans is at least four years in length. For a VA or FHA loan, the wait time teeters around the two-year mark. You can apply for any type of loan after the waiting period, but some loans will be easier to qualify for than others.

Missing Payments May Cause you to Lose Assets

If you miss or refuse to pay your court-ordered payments, you may be at risk of a judge deciding to seize your exempt property, such as your homes, cars, and other secure property. Consider this situation to be a worst-case scenario. That said, you’ll need to do everything in your power to make payments on time. 

It Doesn’t Absolve all Debt

Although bankruptcy does discharge a whopping chunk of debt and prohibits creditors from taking further action against the debtor, filing for bankruptcy doesn’t absolve all debt. Some examples of debt that won’t be discharged consist of the following: alimony and child support, unpaid taxes or tax liens, debts for willful and malicious injury to a person or property, personal damage caused by drunk driving, student loans, debts not on the original bankruptcy petition.

Final Word

Filing for bankruptcy is a nerve-racking and potentially anxiety-inducing process, but it might be the first step you take in regaining control of your finances. Additionally, filing for bankruptcy is an opportunity to free yourself from burdensome debt and declare a fresh start. 

Be aware that bankruptcy is expensive, meaning you’ll have to come to terms with your new financially-rocky situation in life. With resilience and determination, you’ll be able to claw your way out of this economic quicksand. Although not all debt can be dismissed, you can move forward with patience and work overtime to get your financial life in order once again.