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Filing for bankruptcy is a big, painful step. However, the whole process can get confusing to anyone, but that’s why this article is here. If your family is thinking about filing for bankruptcy, there are things you need to know and do to prevent any surprises, such as foreclosure and wage garnishment. Here’s some of the key things your family needs to keep in mind before, after or during the process.

The ugly consequences

Whether or not you’ve started the process of filing for bankruptcy, everyone needs to understand the consequences of taking the big step, and prepare for them. One of the biggest consequences is the huge emotional toll that it takes on someone. Facing what may seem like a financial ruin can be scary, frustrating and emotionally draining.

Secondly, your family’s bankruptcy will get in the public domain. That means that your name and other information that may be directly or indirectly associated with your family members will be part of court records for public access. The process is quite expensive too. For instance, Chapter 7 bankruptcy filing fees may require you to shell out between $335 and $835, and as high as $3,800 for an attorney.

The different types of bankruptcy

Generally, there are two basic options you have when filing for bankruptcy: Chapter 7 and Chapter 13. The former refers to a form of bankruptcy where all your assets are sold through the court; that’s done to ensure you pay as much of the money owed as possible. The rest of the debt is scraped off. The only way you can file for this form of bankruptcy is if the court agrees that your income is not enough to pay back your debt.

Chapter 13 bankruptcy involves a situation where the court approves a plan for you to repay your debts fully or partially over a period of three to five years. That means that you get to retain your assets, and get some time to update your mortgage. The other types of bankruptcy, such as Chapters 11 and 12, are usually reserved for businesses.

Your creditors may challenge the discharge

At some point during the process, creditors can file a lawsuit to challenge your request to discharge the debts, so that they receive their money in full. Definitely, you may not receive any lawsuit notices, which would mean that you are not legally obligated to pay off the debts. The most important thing you need to keep in mind here is to get a good lawyer near you to advise and guide you on the process. For instance, search for “bankruptcy lawyer in New Jersey,” or your particular locale and ensure you disclose all your debts honestly. They will assist you portray your financial situation accurately and seek out the best deal for you.

Declaring bankruptcy doesn’t eliminate all types of debt

There are many forms of debt that cannot be shaken off in bankruptcy. For instance, child support and tax obligations cannot be discharged due to public policy reasons. Other forms of debts that you cannot clear are student loans and expensive items your family bought just before filing for bankruptcy, such as jewelry, cars and boats. Generally, whether a debt can be scraped off or not depends on whether the debt in question is secured or unsecured. A secured debt is often supported by collateral assets, and it includes things like car loans or a mortgage. If you default on this kind of loan, the creditor is free to take the collateral asset, which can be a car or your home.

Conversely, unsecured debts are those that don’t have a specific property tied to them that a creditor can take when you fail to pay off what you owe them. It includes things like medical bills and credit card balances. Usually, a secured creditor can still take the property connected to the loan in bankruptcy, as they retain the right to the collateral. The unsecured debt is the one that’s often eliminated in bankruptcy.


If you have to file for bankruptcy, or have already started the process, you can save everyone in your family a lot of stress, further financial problems and unnecessary issues by understanding the basics, and expecting the consequences. Just remember to get a good lawyer near you to make the process easier for you.

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