You may feel defeated, perhaps even embarrassed. However, if you are facing financial difficulties, think twice before you opt for bankruptcy. Here’s what you might lose:
- Privacy. When you file bankruptcy, the bankruptcy becomes a matter of public court record. Unless a document is sealed, all cases become available for public viewing.
- Good Credit Rating. Filing for bankruptcy can adversely affect your credit rating. Credit reporting services regularly collect and report bankruptcy data to the public.
- Personal or Business Assets. Even though you file for bankruptcy, some debts may not be discharged. A discharge is issued by the court and prevents creditors from taking action to collect the discharged debt. In general, most debts are dischargeable; however, it depends on what type of bankruptcy you file.
- Income. Even though you have filed bankruptcy, there may be some debts you will be required to repay. Repayment may be taken from your paycheck for up to five years after the bankruptcy.
As the debtor, it is your responsibility to:
- Attend credit counseling from a “government-approved organization” within 180 days before you file fir bankruptcy. Afterwards, you must file a letter of credit counseling completion when you file for bankruptcy.
- Attend pre-discharge debtor education after you file for bankruptcy.
- Know how much you are required to repay and to ensure that any garnishment on your wages is accurate. Therefore, if you are supposed to pay $200 monthly, and your employer only withholds $100, speak up. You don’t want to be paying a large sum six or twelve months from now when someone finally realizes the mistake.
Bankruptcy is generally a solution of last resort. Consider some alternatives, such as negotiating with creditors, selling assets or obtaining a debt consolidation loan.