While filing for bankruptcy may seem like the end of your financial world, you don’t have to be afraid of the consequences. Creditors must leave you alone after filing for bankruptcy, and your debt load lightens.

Discover seven things you can expect to encounter throughout the entire bankruptcy process.

Two Options

Two of the most common options when it comes to bankruptcy are Chapter 7 and Chapter 13. Chapter 7 discharges and gets rid of a lot of your debt, including loans and credit cards. The nice part about the Chapter 7 filing is that you can keep most of your assets. The process of Chapter 7 bankruptcy only lasts about three to four months.

Chapter 13 bankruptcy forces you to pay everything back. However, it reorganizes your debt into a payment plan. You must have a regular income to help pay your debt. The timeframe for paying back debts under this plan may take up to five years.

It Affects Credit

If you have a good credit score, then you might not want to file for bankruptcy. Bankruptcy filings appear on your credit report. It wipes out any good history of credit, and it can even last on your score for up to 10 years. You may have to declare your bankruptcy filing on forms you fill out for future loan applications and for when you apply for jobs. A bankruptcy filing may affect your financial well-being for at least decade, if not more, which is why you shouldn’t take this decision lightly.

Some Debts Can’t Be Discharged

Bankruptcy does not solve all of your financial problems. Some debts cannot be discharged during bankruptcy. If you owe back taxes or child support, then bankruptcy cannot help. Student loans also do not disappear after bankruptcy, but if your financial situation is severe enough then a judge may rule you don’t have to repay your student loans. Make sure you take a close look at all of your options before choosing bankruptcy, because you may still owe money to some agencies afterwards.

Paperwork is Public

When you file for bankruptcy, there is a lot of paperwork to fill out. You must spend a lot of time going through everyone to whom you owe a debt, including credit card companies, mortgage lenders, car loan companies, personal loan companies and more. You must name your assets, including any items you could possibly sell to alleviate your debt burden. Examples include jewelry, coins, antiques and valuables. You also have to take time off of work to chat with bankruptcy professionals who can help you with your situation.

Remember, anything that revolves around filing for bankruptcy is public record. Federal bankruptcy court makes the final ruling on what gets paid back and when. However, the actual filing shows up in a public court record.

Bankruptcy Has Stipulations

You can’t just file for bankruptcy, do what you want to do and then move on with your life. There are a lot of stipulations that come with bankruptcy. You must follow the orders set forth by the bankruptcy court. For example, you won’t be able to spend money on your credit cards anymore because those companies will wipe out your accounts after you declare bankruptcy. You may have trouble getting higher credit limits as you try to rebuild your credit later.

You also can’t sell any of your assets during a bankruptcy filing. A court will look at the sales of any property, especially if you sell anything to a family member. Your lawyer can tell you what you can and cannot do during a filing period.

Lawyers are going to charge a flat fee or charge you based on your debt load. No matter who you pick to represent you, make sure they are experienced in bankruptcy filings.

Creditors Can Challenge You

When you first go through your meeting with your lawyer, you have to list all of your debt that you have. This list must accurately portray your situation so you can get the best deal with your creditors. The people you talk with are on your side, so don’t let them find stuff on their own without you telling them!

Sixty days after your initial meeting, creditors have a chance to challenge the discharge of the debt. That’s because they want their money. If a creditor doesn’t notify you that it challenges your debt, assume you do not have an obligation to pay the debt that you owe.

Bankruptcy Won’t Fix Everything

Filing for bankruptcy does give you a fresh start financially, but it is not going to be an instant fix for everything. Odds are good that you might lose some of your assets. Creditors may choose to examine your finances, including retirement accounts or savings accounts, to pay debts.

The most important thing to take away from bankruptcy is figuring out what you did in the first place to get yourself into this situation. That way, you can try to avoid a sticky financial situation the future. Bankruptcy is something that follows you around for a long time after you file. Therefore, you want to save yourself from going through this situation again later in life.

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