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Important considerations before filing for personal bankruptcy

Not as many people are filing for personal bankruptcy protection these days. Still, some individuals in Louisiana may reach a point where debt is overwhelming enough to entertain thoughts of taking this step. There are times when this type of legal debt relief can be considered a smart move. However, debtors should keep certain factors in mind before exploring the possibilities with this legal lifeline.

A common oversight with bankruptcy is not declaring all debts. In order to eliminate or erase debt, the bankruptcy court needs to know all of the details related to what type of debt is owed and to whom it is owed. The assortment of paperwork required for filing is another potential source of preventable errors, such as not submitting bankruptcy schedules with listed debts and assets. It's equally critical for filers to meet bankruptcy criteria, such as mandatory debt counseling.

Conversely, some consumers believe it's best to put off filing for bankruptcy. But in situations when a debtor's ability to get back on track with debts isn't likely to change anytime soon, initiating the bankruptcy process normally stops all harassing phone calls and other debt collection efforts, including wage garnishments. Lastly, some consumers aren't aware that bankruptcy will always be on their record, even if it's eventually removed from their credit history after 7-10 years. Plus, there will always be a need to check the "yes" box on applications where it asks whether or not an applicant filed for bankruptcy.

When bankruptcy becomes an option for a client, an attorney typically offers advice on the pros and cons based on individual circumstances. If there is an honest desire by a client to use bankruptcy to repair and establish credit, a lawyer can ensure all documentation is properly submitted. Legal representation can also be provided during any required hearings.

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