What needs to be done before filing bankruptcy?

Over the past few years, more and more people have accumulated huge credit card debt as well as very high mortgage obligations that they can no longer afford to pay. There are many unpredictable events that can cause people to become unable to meet their financial obligations: events such as an unforeseen illness or accident, loss of a job, a natural disaster, as well many other similar unfortunate situations. When people finally realize that their debt obligations have reached the point where they can no longer afford to make the required payments to their creditors, they may consider a drastic solution: filing for bankruptcy. There are many wrong assumptions about the subject of filing for bankruptcy, and in this article we hope to answer some important questions that you might have and dispel some of these wrong assumptions.

When should I file for bankruptcy?

Bankruptcy lawyers usually advise their clients to wait filing for bankruptcy until debt obligations reach a certain level. In some cases bankruptcy can be prevented with the help of a credit counseling agency which may be able to find ways to manage an individual’s debt as well as reduce his or her monthly payments. Before filing for bankruptcy you should wait until the last minute before your creditors take you to court.

Will I lose the funds I set aside for my children’s education?

If your children’s education fund is in your name, it can be used to repay your creditors. However, if you have set up a separate savings account in your child’s name, it may be exempt from any collection attempts by your creditors. Debt collectors will do all they can to receive compensation for the debts that you owe and therefore you have to be very careful in how you protect your assets and those of your family.

Any stocks or bonds that you might have bought in order to finance your children’s education will be regarded as your own assets if they are in your possession and in your name. In that case they may be used to repay your debt obligations.

For what period of time will my bankruptcy appear in my credit report?

Bankruptcy can remain on your credit report for up to ten years from the date of filing. Once the bankruptcy has been discharged all of the reported debts will show as zero. It will have an impact on your credit score but not nearly as bad as it was before.

This is a great opportunity to learn from your mistakes and learn how to manage your debts better. Many people do not learn from their bankruptcy mistakes and find themselves in the same situation repeatedly.

About the Author:

Author Robert Wise has been researching and reporting on financial matters for years. You can get more information on filing for bankruptcy at his web site.

Robert Wise | Bankruptcy Questions |

Tags: bankruptcy filing, Bankruptcy Questions, popular bankruptcy information

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