Over the past few years, more and more people have accumulated huge credit card debt as well as very high mortgage obligations that they can no longer afford to pay. There are many unpredictable events that can cause people to become unable to meet their financial obligations: events such as an unforeseen illness or accident, loss of a job, a natural disaster, as well many other similar unfortunate situations. When people finally realize that their debt obligations have reached the point where they can no longer afford to make the required payments to their creditors, they may consider a drastic solution : filing for bankruptcy. There are many wrong assumptions about the subject of filing for bankruptcy, and in this article we hope to answer some important questions that you might have and dispel some of these wrong assumptions.

When should I file for bankruptcy?

Most bankruptcy attorneys advise a certain amount of debt before considering bankruptcy. In certain cases an individual can work with a credit counseling agency to help lower their monthly payments and learn how to manage their finances in a better way. The one absolute when it comes to filing for bankruptcy is waiting until the very last minute before being taken to court by your creditors.

Will my children's education money be lost?

If your children's education fund is in your name, it can be used to repay your creditors. However, if you have set up a separate savings account in your child's name, it may be exempt from any collection attempts by your creditors. Debt collectors will do all they can to receive compensation for the debts that you owe and therefore you have to be very careful in how you protect your assets and those of your family.

Any stocks or bonds that you might have bought in order to finance your children's education will be regarded as your own assets if they are in your possession and in your name. In that case they may be used to repay your debt obligations.

How long will my bankruptcy be on my credit report?

A bankruptcy filing can remain on a person's credit report for as long as ten years. This will certainly have a negative impact on your credit score, but after the bankruptcy is discharged your previous debts will appear as zero on your credit report.

This is a great opportunity to learn from your mistakes and learn how to manage your debts better. Many people do not learn from their bankruptcy mistakes and find themselves in the same situation repeatedly.