What should I know before filing for bankruptcy?

| Jan 6, 2021 | Bankruptcy |

When facing significant financial instability, bankruptcy might be the best option for you. Filing can help you get a handle on your debt and stop it from spiraling even further out of control. It can also prevent frustrating creditor harassment, which increases stress and worry when it comes to your financial outlook.

While bankruptcy offers many benefits, it is crucial you go into the process fully informed. Kiplinger provides the following advice, so you know exactly what to expect before, during, and after your bankruptcy proceedings.

Recent spending and transactions will be scrutinized

When you file for bankruptcy, the 70 to 90-day period prior to your filing will be reviewed for evidence of fraud. For example, if you run up a credit card bill in the belief that your debt will be discharged anyway, your actions may be considered fraudulent. As a result, your filing may be denied. If it is approved, you might be obligated to pay off debt deemed fraudulent in full. You should also avoid transferring property to another person in an attempt to keep it separate from the proceedings.

You can only file so many times over a certain period

You will not be allowed to file Chapter 7 if you have done so in the past eight years. When it comes to Chapter 13, you can only file every six years. This highlights why you should carefully weigh the decision before deciding to take the plunge. If bankruptcy is right for you, you should work with a skilled attorney to ensure the complex process is handled in the correct way.

The process may take a long time

How long the bankruptcy process takes to wrap up usually depends on what type of bankruptcy you are filing for. If you are filing Chapter 7, your case may take from four to six months before it is complete. If you are filing Chapter 13, it could take as long three to five years. That is because Chapter 13 is a debt reorganization plan, and you will be given a longer timeline to sufficiently pay back what you owe.