In the past, filing for bankruptcy used to carry the stigma of failure. Many people thought that if someone filed for bankruptcy, they were lazy for not paying their bills. Because of this, most people did everything in their power to hide the facts of their bankruptcy from the world. In the last four years it has lost a lot of the stigma. I don’t know if it’s just that moral values ​​are slipping or it could be that so many Americans file for bankruptcy these days that it’s become commonplace.

For noble Americans who do everything in their power to avoid filing for bankruptcy because they don’t want to pay their debts, they can pay someone back after the bankruptcy liquidation if they feel guided. I personally don’t think it’s necessary unless it’s a friend or family member. In this case, simply sit down and talk to this person and let them know that they will not be included in the bankruptcy and will be reimbursed when possible. For everyone else, as long as the bankruptcy filing was unintentional, this is what it was made for. Filing bankruptcy was giving good, honest, hard-working Americans a second chance and a fresh start. If you have to pay off your debts after the bankruptcy settlement in the side agreement, it will be quite difficult for one to get back on track financially while tied up in debt.

Another section of debt that will survive bankruptcy is secured debt. Most lenders who have secured debts will ask the debtor to sign a reaffirmation agreement during bankruptcy. This agreement will be submitted with the bankruptcy petition to the bankruptcy court. What a reaffirmation agreement does is reiterate the debt and the terms of the contract. Although the debt is secured by the property, the agreement provides that the debt will survive the bankruptcy filing and be paid on an ongoing basis. If the person filing bankruptcy defaults on the loan, the property will be repossessed at the debtor’s expense. Many times, the bankruptcy attorney will tell his client that now is the time to get rid of a car or a house that is turned upside down. If the secured property is included in the Chapter 7 bankruptcy, all deficiencies, legal costs, and property damage will be removed in the bankruptcy discharge. If that same debt is reaffirmed and the person loses it a year later, the creditor can come back and sue the individual for legal fees, deficiency, and/or damages. The person will have no other way out than to pay for it. The creditor may obtain a judgment and force a wage garnishment on the individual. This is devastating for an individual post-Chapter 7 bankruptcy.

Before filing for bankruptcy, it is very important that a person be honest with their bankruptcy attorney and do their best to look into their crystal ball and run through all possible scenarios, even the worst case scenarios. A car or house can be replaced later, but the damage caused by a creditor’s judgment can destroy a person’s financial future.