6 Things You Need To Know About Bankruptcy

March 4th, 2010 by Reed Allmand

1. Bankruptcy is a legal and often wise decision for debtors who are overwhelmed by their debts and need relief.  While some critics of bankruptcy contend that bankruptcy is a “cop out” the bankruptcy system continues to help individuals and businesses discharge debt and get a fresh new start financially.
2. Individual debtors (and married couples) most often file Chapter 7 bankruptcy or Chapter 13 bankruptcy to discharge or repay their debts.  However, high income debtors may file Chapter 11 bankruptcy.
3. A debtor filing bankruptcy must include all of their debts in their bankruptcy filing.  Even if you decide to later repay a debt, it must be included in the bankruptcy.  If a debtor fails to include a debt in their bankruptcy filing they could face a dismissal of their case.  Also, debts must be reported as accurately as possible.  Falsifying bankruptcy papers is a crime.
4. Before filing bankruptcy, debtors must avoid transferring assets to another person or entity.  If a debtor transfers assets to another person or entity before they file bankruptcy, their bankruptcy case could be dismissed and they could be charged with bankruptcy fraud.
5. There is absolutely no reason to hide assets during bankruptcy.  Texas bankruptcy law provides generous exemptions that will allow most debtors to keep their most important assets.  Please work with your bankruptcy attorney to plan how you will maximize your bankruptcy exemptions.
6. While married couples are allowed to file bankruptcy together, it is not required.  One spouse is allowed to file bankruptcy alone without including the other spouse.  However, depending on your family’s financial situation, filing bankruptcy without your spouse may not be a wise decision. Please discuss this issue with your bankruptcy attorney so that he/she can help you make the best decision for your financial situation.