Filing for bankruptcy cannot make one better with handling money, but it can allow for a fresh start. When the decision is made to file, a qualified attorney should be contacted. The attorney will help to follow the correct path and assure that the paperwork is completed properly. The first noticeable occurrence is that the creditors will cease calling. This is a result of the bankruptcy petition filed in the courts. The creditors must stop collections proceedings once they receive notice of the bankruptcy petition. If a creditor fails to cease the proceedings, they may be subject to fees and court sanctions. The bankruptcy petition becomes a matter of public record. This is not a confidential process, however, only creditors will be physically notified by the courts.
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The next step in the process is a court hearing. This usually occurs a month after the petition filing. The hearing is led by a bankruptcy trustee, not a judge, and is the first meeting of the creditors. The debtor will be under oath for this hearing and is required to answer questions about the previously filed paperwork, assets and debts. Creditors may also ask the debtor questions at this time. In most cases a primary residence and vehicle may be kept, unless a payment agreement with the creditor cannot be reached.
Bankruptcy is seen on a credit report for seven to ten years. While it is an option to receive a credit card after bankruptcy, one must be careful not to fall back in the same habits. Most companies that issue credit cards after bankruptcy either keep limits low or interest rates high to help deter debtors from resorting to past patterns. Secured credit cards are also another option. These cards are backed with money that the debtor has already contributed. In ways, these are much like debit cards.
Bankruptcy can typically not expel student loan debt, unless there are extenuating circumstances. If a student loan was provided by the government, it must be repaid. However, if it is not a loan from a government institution or if the loan would cause hardship for the debtor or debtor's dependents, the loan may be discharged. Alimony cannot be discharged unless the amount provides more harm to the debtor than benefit to the spouse.
Bankruptcy should always be considered a final option and last resort. Bankruptcy should never be seen as an easy way out or a way to cheat the system. It is a court process where debtors with severe financial situations can be relieved of their debts. By having a qualified attorney to help with this difficult process, the choice of bankruptcy should go smoothly.
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