Many debtors considering bankruptcy have a lot of questions about what they should do, what they should expect and how a bankruptcy filing will impact their credit and financial future. Where here are five things you should know about bankruptcy before you file.
1. Filing for bankruptcy will stop all creditor actions against you immediately. Using an automatic stay, the bankruptcy court will prohibit creditors from contacting you, filing a lawsuit against you, seizing your assets or collecting on a judgment. This also means that any foreclosure proceeding will stop.
2. When filing for bankruptcy you must report all of your debts and assets. If you took out a $200 loan from a relative or friend, it must be listed. If you intend to repay the debt after you file bankruptcy, you must still list it. Any assets in your name or that you recently transferred to another person must be disclosed in bankruptcy.
3. If you are owed a tax refund for the tax year in which you file bankruptcy, you may need to give part or all of it to the bankruptcy trustee. You may also need to give the bankruptcy trustee any tax refunds for any previous years you are owed.
4. A bankruptcy filing will remain on your credit report for ten years; however, most debtors are able to obtain credit within a year or two after their bankruptcy discharge.
5. You must report all of your financial information honestly in bankruptcy or you could be charged with a crime. If you attempt to conceal assets, make false statements, defraud creditors or in some way attempt to manipulate the bankruptcy system you could be faced with fines and up to five years in prison.