To a majority of us, bankruptcy can be a humbling, embarrassing and scary event. No one plans on having to file bankruptcy when they commit to credit accounts. But as life goes, things change. Whether it is because of substantial doctor’s bills, job loss, overwhelming credit card debt, repossessions, a very unmanageable mortgage or even a judgment that cannot be settled (a judgment is when a creditor takes you to court and the court orders you to pay. Sometimes you can make a deal on the day of your court appearance for a payment plan (to avoid the judgment being issued), but if enforced, this is a negative mark that will remain on your report for upwards of 10 years. Which is usually the same time period of a bankruptcy). Most individuals that have a judgment usually end up bankrupting instead, to create a fresh start all together. It’s important to know that a judgment can be issued for something small like a couple hundred dollars to tens of thousands – So do not take it lightly. The good news is, as long as you understand the situation, you may not have the need for an attorney for a judgment. Most do not, but if you are uncertain or worried, you may want to at least look into it.
As mentioned above, a bankruptcy will typically forgive credit card debt, doctor’s bills, car loans, etc… However there are items in which you will still be responsible for, and payment terms may not be able to be altered. These items include (but not limited to):
- State/Federal taxes/liens
- Student Loans
- Child Support
- Government Fines/Penalties
- Condo Association Fees
- Lawsuits for events such as wrongful death, under the influence accidents, injury cases
- Fraud/Embezzlement repayment/penalties
Bankruptcy does allow you to create a fresh start, and most creditors allow you to re-establish credit from the ground up. Once completed, expect pre-qualified auto loan offers, credit cards (typically with a limit of $100-$300), and more. However, remember this is a fresh start. So only take on what you can handle. It is important to add some new activity, but remember how/why you got there. Do not commit to something you’re not confident you can handle. Also, please visit our post-bankruptcy tips and rebuilding page.