When the time comes to consider bankruptcy as a means to escape unmanageable debt, there are a few things you should know before moving forward. There are many myths that abound in regards to bankruptcy and what happens before, during and after you have filed papers to begin the process. Here we will cover a few of the basics of bankruptcy to help consumers navigate this often misunderstood legal remedy to debt.

• You need money to file for bankruptcy- Have you ever noticed how many situations in life just don’t make sense? This is one of them. Filing for bankruptcy, which is basically saying you are insolvent or unable to afford your debt, is not free or even cheap. In fact, before you start shopping for a bankruptcy attorney, you might want to begin saving money for a retainer. Depending on where you live and how much lawyers are charging, you could safely bet starting the process will cost you around $2000. If you absolutely have no way to save money, you might qualify for assistance through a non-profit organization.
• Pay bills that are not included in the bankruptcy- There are different types of bankruptcy for which you can file. If you have selected a Chapter 7 bankruptcy, you will probably notice that you will stop receiving ALL bills regardless of whether or not they are included in the bankruptcy. If your home or automobile is excluded and you want to hang onto that property it is up to you to make sure the payment gets to the lender. If you wait until a few months down the road when the bills begin arriving again, you will be several months late in payments.
• You are not alone- Bankruptcy is notorious for being damaging to both your credit and personal standing in society. Many people assume bankruptcy will never happen to them and therefore stand in judgment of others who have faced a severe financial hardship. Granted, you won’t get much sympathy if you have managed your money irresponsibly, however if you find yourself in this position due to the economy or just a string of bad luck, find comfort in the fact that you are not alone. The first quarter of 2009 showed an increase of 36.5% of bankruptcy filings among the middle and upper class with the numbers expected to rise as consumers deal with the fallout of the recession.
• Learn as much as possible before filing- Bankruptcy laws have changed over the years and it only makes sense to make sure you know all of your options before filing for bankruptcy. Research and understand the different forms of bankruptcy as well as the negative consequences of filing. It is imperative you know exactly what to expect and how to move forward if you want to avoid finding yourself deep in debt in the future.

Bankruptcy is considered the last available option for debt reduction. It is a legal process which can help those who are facing a real hardship find relief and start fresh. Before taking this drastic step make sure you qualify and have a plan in place to manage your finances moving forward.