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When a person has no way to repay his debts, the only way out is through a declaration of bankruptcy. Filing for a bankruptcy entails some legal steps that should be religiously followed. There are no magic steps during the process so. When you're approached by some companies promising you quick fixes then they definitely are scammers.

One should understand that bankruptcy cannot eliminate all your debts. Before you go ahead and file for a bankruptcy, you should have enough knowledge on what debts are forgiven and which are not. In order for you to know this, you may want to attend a counseling which is aimed to educate you about the processes and the facts about bankruptcy. Just be reminded though that the said counseling is not free.

As stated earlier, filing bankruptcy is a way to get out of debts but there are some exceptions. The following are the types of debts which are not subject to non-repayment:

  • penalties or fines incurred due to commission of law violations such as traffic offenses and criminal restitutions.
  • debts which you failed to declare unless your creditors are aware of your bankruptcy filing
  • Debts you have incurred due to death or injury that resulted from intoxicated driving
  • child support and
  • taxes.

Non-payment of debts can lead to embarrassment and harassment. Harassment can come in the form of phone calls or letters from your creditors and if you can't take them anymore seek a bankruptcy expert's advice the soonest possible. Be very careful with whom you make transactions with for you might only fall under the hands of people who would only take advantage of your situation. The American Bankruptcy Institute can help you find legitimate experts or lawyers.

As the classical saying goes, an ounce of prevention is worth more than a pound of cure. In order for you to avoid such an embarrassing situation, learn how to manage your finances. There is a big difference between a want and a need. Make purchases only on your needs, besides you still can get by without buying your wants.

Don't take out loans for nothing or if you don't have enough resources to make the repayment. If you have credit cards, make it a habit to pay your dues on time to avoid penalties. It actually is easy to avoid bankruptcy; it is just a matter of knowing what your financial priorities are.