Filing for bankruptcy is a huge decision in anyone’s life. Before you go through with it, you need to understand the gravity of the situation. It is vital that you know everything that can happen when you file for bankruptcy. The advice in this article will get you off to a good start. Deciding whether or not to file for bankruptcy is a big decision. Proper and thorough research can alleviate some of that pressure.
Do not attempt to pay your taxes with your credit cards and subsequently file for bankruptcy. You will find few states that discharge this kind of debt. You may also wind up owing a lot of money to the IRS. A common rule is that dischargeable tax means dischargeable debt. This makes using a credit care irrelevant, since bankruptcy will discharge it.
Ask yourself if filing for bankruptcy is truly your best option. You have other options, including consumer credit counseling help. Since your credit history will forever note the bankruptcy, you want to make sure that you have tried everything else before you take an action such as this, in order to minimize the effect it will have with regard to your credit history.
Avoid exhausting your savings or emptying your retirement accounts to pay off creditors if you are considering filing for bankruptcy. You shouldn’t dip into your IRA or 401(k) unless there is nothing else you can do. Though you may need to use a bit of your savings, try hard to maintain some of your reserves so that you have some degree of flexibility going forward.
Unsecured Credit
After filing for bankruptcy, you may have difficulty getting approved for unsecured credit. If that is the case, you should try applying for one, or two secured cards. This will show other people that you’re serious when it comes to having your credit record in order. If you pay your secured card off on time, you’ll eventually find that companies will start offering you unsecured credit.
Make sure you keep reminding your attorney about any important details in your case. Chances are that you may have forgotten to tell them about certain specifics that may be important to your filing. All information submitted to the court with your signature needs to be double checked.
Prior to putting in the bankruptcy paperwork, determine what assets are protected from seizure. The Bankruptcy Code lists assets considered exempt from being affected by bankruptcy. It is important to be aware of this list so you will know what assets are saved. If you fail to go over this list, you may be unpleasantly surprised sometime down the road if any of your most valued items are seized.
When a bankruptcy is imminent, retain a lawyer immediately. Bankruptcy is a complex process, and you probably don’t know all the information that is required to navigate it. A specialized bankruptcy lawyer can ensure that you are handling your bankruptcy filing the right way.
Be sure to weigh all of your options before deciding to file for personal bankruptcy. For example, if your debt is small, try a type of consumer counseling program. You may have the ability to negotiate much lower payments, just be sure any debt modifications you agree to are written and that you have a copy.
If possible obtain a personal recommendation for a bankruptcy lawyer instead of randomly choosing one. There are a number of companies who may take advantage of your situation, so always work with someone that is trustworthy.
Chapter 13
Before filing for bankruptcy, determine whether Chapter 13 or Chapter 7 is appropriate for your financial situation. Chapter 7 is the best option to erase your debts for good. The ties with the creditor will be broken. If you file using chapter 13 bankruptcy, you will go through a sixty month repayment plan prior to all your debts being completely dissolved. It’s imperative that you know the differences among the various categories of bankruptcy so that you are able to choose the wisest one for you.
Protect your home. Filing for bankruptcy does not always mean you will end up losing your home. If your home value has gone down, or if there’s a second mortgage, you might be able to keep it. You are still going to want to check into homestead exemption either way just in case.
You must be absolutely honest when filing for personal bankruptcy. If you try to hide any of your information, it will eventually surface and cause you problems. Good or bad, you must tell your bankruptcy attorney everything about your financial situation. Keeping secrets or trying to outsmart everyone is not a wise move.
It is important to understand clearly the benefits of a Chapter 7 or 13 bankruptcy. Take the time to find out about each one online, and look at the advantages and disadvantages of each. Go to a specialized lawyer to ask your questions and get some useful advice on what to do.
Look into all of your options before you choose to file for bankruptcy. Speak with an attorney who specializes in bankruptcy to find out if alternatives, such as a debt repayment plan or a reduction of your interest rates, might be better for you. If foreclosure is imminent, see if your loan can be altered at all through a modification plan. Lenders can assist you in a lot of ways, by cutting interest rate charges and cutting off late fee charges. They can also lengthen the loan. Creditors would rather be repaid, however slowly, than have you declare bankruptcy.
Don’t wait until it is too late to file for bankruptcy. Some folks ignore financial difficulties for a long time, and this can be disastrous. Debt could become uncontrollable and by not dealing with them properly, your wages could be garnished or you may find your home in foreclosure. Consider all possible options before filing bankruptcy.
Do some research about laws and legislation before filing. This area of law is in constant flux and it is imperative that you know where the law stands at the time you file for your bankruptcy. All of these changes will be addressed on the state’s legislative site. You can also contact them directly by phone or office visit.
Do some research about bankruptcy laws before filing for bankruptcy. Here is one example, an individual who files for bankruptcy cannot transfer any assets for a year before the filing date. Also, you must never incur significant new obligations must prior to filing for bankruptcy.
Take a look at all of your financial options before filing for personal bankruptcy. For example, you may want to think about credit counseling. You can easily find non-profits that can assist you in your debt struggles. With their assistance, you can reduce the payments you have to make and even get some of the interest removed from your debts. You make your monthly payments to the credit counselors, and they pay the money to each creditor.
You should obtain a copy of your credit report from all three reporting agencies soon after you declare bankruptcy. Look to see that the reports have accurately documented your discharge and other information. If any discrepancies appear, check on them immediately. This will allow you to start fixing your credit.
Understand the differences between Chapter 7 and Chapter 13 bankruptcy. The Chapter 7 variety can help you eliminate your debts almost entirely. You will no longer be liable for any money that you owe to your creditors. With a Chapter 13 bankruptcy, you will have to make payments for 5 years before the debts are forgiven. In order to choose the right bankruptcy option, you need to know the differences between these kinds of personal bankruptcy filings.
As you can see by now, there are different ways of filing for personal bankruptcy. Avoid being overwhelmed by too much information. Take a deep breath and let the information sink in. You can make more thoughtful decisions this way.