Eliminating Debt: Four Things You May Not Know About Bankruptcy

Bankruptcy is a financial tactic that can eliminate most of your debt and leave you with a clean slate. According to Bankruptcy Action, more than 900,000 Americans filed for bankruptcy in 2014. If you find yourself with a mountain of bills and no cash to pay them, you may be a candidate for bankruptcy.

Before you elect to declare bankruptcy, make sure you educate yourself. Although it may solve some of your problems, it cannot solve all of them. In fact, you may be surprised to learn these four things about bankruptcy:

1. You May Not Lose Your Possessions

Many people believe that they will automatically lose all of their possessions immediately after filing bankruptcy. Although you may lose some of your assets, you probably won't lose them all. In some cases, you may not lose any of your belongings.

In fact, you may be able to keep your home and car—even if you are currently paying on them. What you can keep depends on your situation. It will also depend on what type of exemptions you use.

2. You Can File Alone, Even If Married

For some reason, people tend to think that they cannot file for bankruptcy if they are married without affecting their spouse. However, you can file for bankruptcy alone—and it will not affect your spouse's credit score. The bankruptcy process will not affect any assets in your spouse's name either.

The official may want to look into your income as a couple, as well as your spouse's income. This investigation may seem a bit intrusive, but it is just to make sure that you and your spouse aren't hiding a good chunk of money.

3. Lenders Don't Mind Bankruptcy

You may be surprised to learn that most lenders will begin lending to those with a bankruptcy on their record in as little as six months. Although your rates will not be as good as someone with good credit will, you can still get a credit card or a mortgage after going through bankruptcy.

4. You May Still Have Debt

Surprisingly, bankruptcy does not discharge all debts. Some debts, like taxes and child support, will remain on your credit and will require payment—even after a bankruptcy has ensued. You will also be responsible for paying down your student loans, regardless of their age.

These surprising facts, a bankruptcy lawyer, and a good look at your finances can help you determine what is best for you. For more information, contact Morrison & Murff or a similar firm.