Bankruptcy Advice

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How To File Bankruptcy The Right Way

By Jon Arnold

Like almost anything else, there is a right way and a wrong way to file bankruptcy, just as there is a good reason and a bad reason to file bankruptcy.  Your success with your filing will depend heavily on what caused you to get into the position of thinking you need to file for bankruptcy, as well as the status of your personal assets.

The most common reasons for filing for bankruptcy are unemployment, huge unexpected medical expenses, marital problems, or largely overextended credit card bills.  But filing for bankruptcy may not be the easy way out that many people think it is, and as it actually may have been a few short years ago when the bankruptcy laws were easier and more sympathetic to a person’s circumstances.  But the laws today are tougher, and it is very difficult to successfully file bankruptcy without a good case and good reasons to back it up.  Also, many people do not consider bankruptcy alternatives, where you need to realize that bankruptcy should be your LAST consideration, not your first one.

First you need to consider your current situation.  If you are unemployed, living on welfare or some sort of public assistance program, you have little or no money in any bank accounts, you do not own a car or truck, and/or you rent your home or are living with others, there is very little that bankruptcy can do to resolve or improve your financial situation.

If however you feel that filing bankruptcy is your only option, and I hope you have thoroughly explored all of your options and alternatives before reaching that conclusion, you should definitely discuss this with a good bankruptcy lawyer or bankruptcy attorney.  In many cases, your first consultation will be at minimal or even no charge, and the lawyer can advise you as to what course to pursue, or if bankruptcy declaration is going to help, or perhaps make matters very much worse overall.  There is a form at my web site which is free and can put you in touch with a local bankruptcy attorney who can look at your unique situation and would be aware and well versed in how bankruptcies are handled in your state and your particular part of the country.

A bankruptcy lawyer can help you determine factors like if it can be proven or demonstrated that you have abused your credit privileges, then you may even be disqualified from filing for bankruptcy.  This is known as a “means test”.  Of course, there are always unique factors which got you to this situation, such as divorce, medical bills, unexpected and unavoidable large expenses, etc, all of which can play a factor as to whether you can file bankruptcy, and if you can, if it will help you at all.

For most people, the biggest disadvantage to filing personal bankruptcy is the fact that the bankruptcy will appear on your credit report for six years or more after you are discharged from bankruptcy.  This is a huge red flag on your credit report, and obtaining new credit after filing for  bankruptcy is going to be difficult if not impossible from most traditional lenders and credit card issuers.

For this reason, you will want to keep a very close eye on your credit report and make sure that all the information shown there is accurate and is reflected in the best light possible.  Although it is not known by many people, the vast majority of credit reports on consumers contain errors, and it is up to the individual consumer to initiate a dispute to get the right information shown.  For more information on how to get incorrect information on your credit report removed or corrected, I recommend that you visit Improve Your Credit Score and start using the tips presented there as quickly as possible.

With bankruptcy, like anything else, going about it the right way and knowing what you are getting into is the best way to approach it so that you do not end up doing more damage than the situation you are already in.

Jon is a computer engineer who maintains web sites on a variety of topics based on his knowledge and experience.