If you are in a challenging financial situation and you don't see a way out of your situation, it may be time to consider filing for bankruptcy. When it comes to filing for bankruptcy, there are some things you may not know about the process that are important to understand.

Important Thing #1: All Creditors Are Included

When you file for bankruptcy, it is essential to realize that all creditors you owe money to are included when you file. Every loan you owe money on will be included, including car loans, mortgages, credit card debt, and medical debt.

If there is a piece of credit that you don't want to file on, you will have to sign a reaffirming agreement for that debt. This allows you to pull the debt out of the bankruptcy process essentially. This is sometimes done with debt with collateral on it, such as a mortgage or a car loan, where you may want to keep paying the loan to keep the item, or you may want to give back the collateral.

Important Thing #2: Old Income Taxes Can Be Discharged

Most people are not aware that older income taxes can be discharged in the bankruptcy process. If your income tax debt is greater than a certain number of years, you may be able to get it discharged during your bankruptcy. The entire point of bankruptcy is to give you a fresh start, and if you are still saddled with income tax debt, that may not happen. Recent debt can't be forgiven, but the court can choose to forgive older income tax debt, which can help you build a stronger financial future.

You can only get this debt discharged if you filed a tax return and you didn't commit fraud or willful tax evasion.

Important Thing #3: Not All Creditors Shows Up on Credit Reports

The courts are going to use your credit reports to find your creditors. However, everyone you owe money to may not show up on your credit report, which is why you need to report all of your debt to the court.

For example, medical bills generally are not going to show up on your credit report. You will need to find everyone you owe for medical bills. In most states, tax debt, such as property tax, sales tax, or income tax, will not show up on your tax report. Most business loans don't show up on personal credit reports.  

That is why it is essential to know who you own money to so that all of your creditors will be included in your bankruptcy filing.

When it comes to bankruptcy, all creditors the court can identify will be included in bankruptcy proceedings. However, not all creditors will show up on credit reports, so be sure to report all creditors to the courts. Also, your old income taxes can potentially be forgiven in bankruptcy, so be sure to include that debt when you file. Talk to a bankruptcy attorney if you'd like to file for bankruptcy.