Bankruptcy Information - Free Information on Filing for Bankruptcy

Basic & free information on how to file bankruptcy

In all the complexity associated with bankruptcy, it's often easy to miss out on some basic bankruptcy information. Here are the Top 10 most common misunderstandings:

1. Bankruptcy stops creditors immediately. They cannot take away your wages or harass you for payment, as you are now under the legal protection of the federal court. This automatic stay, as it is called, is a relief measure that can even prevent foreclosure on a house or car.

2. The process begins with paperwork, and bankruptcy forms are available to everyone. Get them free online, or write to your local bankruptcy court and request them via post.

3. There is an initial court fee of $200 to file bankruptcy papers.

4. Bankruptcy cannot get you fired. Employers and the government are legally prohibited from treating you any differently than if you had not filed for bankruptcy.

5. You might (although probably won't) lose your house. Whether or not your home is at risk depends on how much you owe, how much your home is worth, and what the exemptions are in your state. For example, Rhode Island allows a 'homestead exemption' of up to $150,000. Check your state's bankruptcy information.

6. It is even less likely you will lose your personal belongings, for household goods and clothes are rarely worth enough for creditors to target. States recognize this, e.g. Alabama allows unlimited books and pictures, Michigan grants you up to $1,000 of household belongings, and Vermont allows you one stove, one refrigerator, heating appliances and one sewing machine, plus $2,500 in other goods.

7. Your spouse is not necessarily affected. Most states (except for Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin) consider your debt and that of your spouse separate.

8. The social stigma attached to declaring bankruptcy is fading. Society held the misguided view that anyone who declared bankruptcy was worthless, perhaps with a gambling or addiction problem. In reality bankruptcy affects every socioeconomic level, in every area of the country. It's usually out of control credit card debt that swallows the stricken. If you do not want people to know about your financial worries, it's as simple as not telling them.

For more information on bankruptcy and bankruptcy laws, look at our bankruptcy FAQ's.