When filing for bankruptcy, a planned timeline should be established several months before the actual bankruptcy papers are filed with the court system. Your qualified bankruptcy attorney should be able to guide you through this timeline during your initial consultation. During this consultation, the attorney should tell you what bankruptcy “is not” and what it “can” do for you, as well as the consequences.
Bankruptcy is designed to forgive most debt on revolving lines of credit. It will not eliminate all types of debt an individual owes. Federally subsidized student loans are one example. This type of debt is excluded from bankruptcy protection. Mortgages are another type of debt that will not be discharged, but with the help of a qualified attorney or sometimes the debtor themselves, a forbearance can be arranged to allow for a temporary delay in mortgage payments due.
Some bankruptcy candidates may think that several months before the official bankruptcy process begins, if they are definitely going to file for bankruptcy, they should take the maximum cash advance on each and every credit card they own. Depending on the individual situation, doing so can complicate things and is therefore not a smart course of action. In other words, don’t do anything fraudulent, deceptive or that could be seen as “trying to get one” at banks.
Any vehicle or real estate should not be sold or purchased any time before or even after bankruptcy is declared. Banks and other credit bureaus are within their rights to review many financial transactions that occur in connection with an individual who has already filed for bankruptcy. If any real estate or vehicle changes hands, lenders can require that the money received from the sale of the property be seized and turned over to pay off any debt.
Like most legal situations, there is a period of time that reviews can take place after bankruptcy has been filed. As always, consulting with an attorney who specializes in bankruptcy and other financial matters is always the best course of action and will prevent many complaints when trying to rebuild a positive credit history.
