When you are considering filing for bankruptcy, there are several points that you need to think about. While most people already know that they need to find how the bankruptcy will affect their assets, they might not realize that there are other considerations.
The type of debts you have are one consideration, especially if you are filing for Chapter 7 bankruptcy. There are some debts, such as secured debts and student loans, that aren't dischargeable in the bankruptcy. Some other debts that can't be discharged include fraudulent debts, taxes, alimony payments, child support payments and some court judgments. If non-dischargeable debts are the majority of what you owe, bankruptcy likely won't help you.
Another consideration occurs if you have co-signers on your debts. If you have co-signers for your debts, creditors could go after those co-signers if you file for Chapter 7 bankruptcy since your responsibility for the debt is dissolved. If you file for Chapter 13, however, the co-signers are protected because you will have to use your disposable income to repay your creditors for a pre-specified term, which is most often 60 months.
A final consideration is if you have unsecured debts that you want to repay. You can't just leave those debts off your bankruptcy petition because that is fraudulent. Instead, you have the option of repaying the debt after it is discharged in a bankruptcy.
These considerations might not affect every person who is considering a bankruptcy filing. If you are considering filing for bankruptcy and one of these pertains to you, seeking out answers that are specific to your case might help you decide how to take control of your financial situation.
Source: Enlighten Me, "Tips for Filing Bankruptcy," accessed April. 23, 2015