Many people assume they know all there is to know about the bankruptcy process. The truth is that there are many aspects about the process that people are surprised to learn when they file. Many of these surprises are beneficial to the consumer, but some small issues that should have considered prior to filing.
One of the surprises people learn about the bankruptcy process is that it is actually quite painless. Designed to be a tool for relief, the process can be completed with little upset to the consumer. In a Chapter 7 case, much of your essential assets are protected from creditors. The threat of liquidation is actually smaller than most people think. In a Chapter 13 case, big assets like a house and car can have guaranteed protection. As long as payments are made according to the repayment plan, many people find that their debt burden can be resolved with no threat of liquidation.
Another popular area of surprise is post-bankruptcy credit. Assuming that their days of good credit are over, many people find that their credit is in better condition after bankruptcy than prior to filing. The reason is simple, debt resolution. Once high debt balances are erased and delinquent status reports removed from an account, many people's credit score sees and immediate improvement.
Filing for bankruptcy is a big decision, and one that should be carefully considered before filing a petition. First, there are some actions that could have considered suspicious with the court. Performing these actions before or during a bankruptcy case could have been viewed as fraudulent. For example, accumulating a lot of debt, intentionally forfeiting income, selling or hiding assets are all areas that could cause concern. It is important that finances, debt accounts and assets remain reliably stable in the months leading up to a bankruptcy; otherwise the outcome of the case could be jeopardized.
After a bankruptcy case, people may find that creditor begin contacting them again. Having been under the assumption that the protection from creditors extends after bankruptcy, there are a few reasons why creditors could attempt to collect. If an ex-spouse files for bankruptcy, the remaining spouse could be pursued for debt liability. Debts that were ineligible for a discharge are also likely to be resumed by collectors.
The bankruptcy process is not meant to be intimidating; rather it simply requires the guidance of a trained professional. It is the role of a bankruptcy attorney to ensure that there are no surprises and that every eligible debt discharge goes off smoothly.