If you’ve declared bankruptcy, don’t feel too bad about it. Even some very famous people rise again from bankruptcy and make a fortunes. Keep in mind that many of the world’s millionaires and billionaires are veterans and survivors of bankruptcies. Sometimes, when you bet big, you lose big. Whether you made some bad investments or you just let your credit cards and other obligations get the best of you, rest assured that bankruptcy enables you to have a second chance. You are hardly alone.
Every single year, a huge number of people declares bankruptcy-not just in the USA but in many corners of the globe. With that said, you have to remember that there are certain rules you have to stick to if you’re bankrupt. These rules all have something to do with your finances. Most of these rules deal with the kinds of debts you can discharge through bankruptcy. You might be surprised to find out that declaring bankruptcy might not give you that clean slate you’re hoping for. There are still some obligations that are left for you to pay off. Here are just some of the most common restrictions bankrupts face.
You cannot discharge debts via bankruptcy for the period years set by your jurisdiction
Before you declare bankruptcy, keep in mind that you can’t discharge your new debts again quickly after filing bankruptcy. Different jurisdictions have different ‘cool down’ periods for bankrupts. During these periods, you are completely responsible for your debts and have to deal with paying them off. You can’t declare bankruptcy to clear them out until the cool down period expires. Depending on your jurisdiction, this can be a few years or can even extend past a decade.
People filing bankruptcy cannot discharge debts if they were found to engage in fraud by a court
If a court found that you lied about your debts or otherwise deceived the court to discharge your debts, your debts might not be discharged. Be very careful about the stuff you claim in bankruptcy court. Any white lies you tell might come back to haunt you-in a very big way.
Bankrupts can’t escape liability for debts they didn’t expressly itemize in their filings
When you file bankruptcy, you have to list out your debts. If you fail to list an obligation, you still have to pay that obligation. Your bankruptcy didn’t wipe it out.
Bankrupts can’t escape liability for taxes or debt owed the government
If the government paid for your college education through a student loan program, you can get out from under that loan through bankruptcy. Also, if you owe the government any back taxes, you are prevented from writing these off through bankruptcy. Imagine if the government allowed this, very few would pay taxes! They would just rack up tons of tax liabilities and declare bankruptcy.
You can’t escape liability for child support or alimony
If a court ordered you to pay for the support of your child or your ex-spouse, your obligation isn’t wiped out when you file bankruptcy. This makes all the sense in the world. If people were able to do this, they would be able to legally stop supporting their children and families. Bad public policy, indeed.
Now that you’ve declared bankruptcy, enjoy your new freedom. Keep the tips above in mind to make sure you have a clear idea of how far and wide your new freedom extends.
If you feel that life isn’t fair because you have brunt the burden of being a bankrupt, just remember that there must be a price that individuals have to pay for getting into such financial trouble. Think about the parties that did not recover the money that you are liable for. It’s not fair to them to make such losses as well. The great part is that bankruptcy gives you a route to move on and be grateful that you have a second chance.