There are some pitfalls of bankruptcy that might catch you off guard if you’re not prepared, which is why your attorney is an important person to consult with before you decide to move forward. For one thing, you may find that the bankruptcy you expect isn’t exactly what you get, especially if you’ve moved states. Each state is different, so it’s vital that you work with a local attorney to make sure you know the exact laws in your state.
If you’re planning to get a bankruptcy to eliminate your mortgage or student loans, your attorney can explain why this isn’t the best plan. Besides the fact that discharging those debts is next to impossible, there may be better ways to reduce your debts without having to damage your credit.
Sometimes, taxes are what get you in deep trouble and debt, but that’s another area where bankruptcy won’t be much help. Just like with secured loans, taxes can be difficult to discharge in bankruptcy. It is possible, but your attorney may need to walk you through the steps, because certain kinds of tax debts won’t be able to be eliminated, no matter how old they are.
Of course, the other reason to consult with someone knowledgeable about the laws of the state is for an easier filing. If you decide to move forward with bankruptcy, you’ll want to be sure you’re entering the right kind. You wouldn’t want to choose Chapter 7 if 13 would suit you better. Working with the right team can help you make positive decisions to best affect your future.
Source: The Street, “9 Nasty Pitfalls of Chapter 7 Bankruptcy That You Should Know,” John Persinos, Nov. 23, 2015