Unfortunately, the subject of bankruptcy is all too common these days. If you are considering bankruptcy, you are not alone. Prior to making the decision to file a petition, you need to have a thorough understanding of the topic so that you act in your own best interest. This article will provide you with that information.
The primary catalyst for filing personal bankruptcy is having a large amount of debt that can’t be readily repaid. If this sounds familiar, you should read up on the bankruptcy laws in your state. The laws governing bankruptcy vary from state to state. For instance, in some states you can keep your home and car, while other states prohibit this. Do you research about legal ins and outs in your state before you begin the bankruptcy process.
Before you file for bankruptcy, carefully consider if it is the right option for you. Look into other options, such as consumer credit counseling. Bankruptcy will leave a permanent scar on your credit report and before you take this huge step, you should search through every available option first, to help try and limit the damage to your credit.
Do not even think about paying your taxes with credit and petitioning for bankruptcy right after. Most of the time, you cannot discharge this debt. As a result, you will owe the IRS a lot of money. Generally speaking, debt incurred to pay taxes and the tax bills themselves are treated the same in a bankruptcy. Therefore, you have no reason for use of a credit card, if the amount is to be discharged in due process of the bankruptcy.
If you suspect that bankruptcy filing may be a reality, don’t try to discharge all your debt in advance by emptying your retirement or saving accounts. Don’t touch retirement accounts unless you don’t have a choice. While dipping into your savings is likely to be necessary, avoid wiping it out completely to prevent leaving yourself with little financial security in the future.
Find out what you exemptions are prior to filing bankruptcy. There are some assets that cannot be seized through bankruptcy, and the law lists those assets. It is important to be aware of this list so you will know what assets are saved. Failure to do this could cause some ugly surprises down the road when you discover that your valuables must be seized.
Be as honest as you possibly can when filing for bankruptcy; hiding liabilities or assets will only hurt you in the long run. 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.
Ask for a free consultation with your bankruptcy attorney and ask questions about experience and education. When you arrive at a consultation ask plenty of questions. You should also seek free consultations from several attorneys prior to choosing one. Don’t choose a lawyer until your questions about bankruptcy are sufficiently answered. Take your time choosing the right attorney to assist in your bankruptcy. So you have sufficient time to speak with a number of lawyers.
Before declaring bankruptcy, be sure you’ve weighed other options. One example would be that a consumer credit program for counseling if you have small debts. You may also find people will allow you to make lower payments. If that happens, get records of the debt modifications.
Chapter 7
Before you file for personal bankruptcy, be sure that you are cognizant of all current laws. The laws change a lot, so you need to look them up and have a better idea of how to properly approach the bankruptcy process. Check the website of your state’s legislation or get in contact with your local office to learn more about these important changes.
Remember to understand the differences between Chapter 7 bankruptcy and Chapter 13 bankruptcy. All debt will be eliminated with Chapter 7. All happenings with creditors will disappear. In a Chapter 13, though, you’ll be put on a payment plan for up to 60 months before being free of your debts. 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.
Meet with a few attorneys who offer free consultations before hiring one. It is important to meet with the actual lawyer, because paralegals or assistants cannot give you legal advice. By meeting with several attorneys through a free consultation you will be able to choose which attorney you feel more comfortable with.
Don’t isolate yourself from family and friends. Bankruptcy proceedings can be extremely harsh. It is long, stressful and makes people feel like losers. Avoidance of friends of family during the process is not uncommon. But, keeping to yourself is likely to cause even greater sadness and despair. Remember that it is not your families fault for your financial hardships and use this time to pull together and be strong.
Safeguard your home. You don’t have to lose your home just because you are filing for bankruptcy. Depending on if your home’s value has gone down or if it has a second mortgage, you might be able to keep it. Check to see if you pass the requirements necessary to file for a homestead exemption.
Even if you are involved with Chapter 13 bankruptcy, it is still possible to get a mortgage or an automobile loan. It’s a bit more difficult, though. You have to meet with your trustee to get approval for the new loan. You need to develop a budget and show that you will be able to afford the new payment. It will also be necessary to show why a new purchase needs to be made.
Look at bankruptcy as a chance to mature and take responsibility for your personal finances. Bankruptcy can sometimes leave people feeling guilty, ashamed and alone. Continuing to let yourself feel that way can damage your emotional health and does not benefit you in your endeavors to deal with your financial situation. Remembering to stay positive as you go through financial difficulties is a great way to deal with your bankruptcy filing.
Bankruptcy is a difficult time that always leads to lots of stress. Engage a competent lawyer in order to avoid excess stress and keep everything on track. Don’t allow cost to determine who you hire. You do need someone who is costly, just someone who is good at what they do. Get referrals from those who have used a bankruptcy lawyer, talk to the bureau for better business, and take advantage of free consultations offered by most lawyers. You might want to visit a court hearing and observe lawyers handling their cases.
Make sure you know how to differentiate between Chapter 13 and Chapter 7. There is a wealth of information online about each type of bankruptcy and their respective pluses and minuses. Go to a specialized lawyer to ask your questions and get some useful advice on what to do.
Make sure you are completely aware of bankruptcy laws before you consider filing. For instance, you need to know not to shift assets into someone else’s name in the year leading up to your filing. Moreover, a filer is prohibited from spending or incurring extra debt prior to their bankruptcy filing.
As you are no doubt aware, bankruptcy is much talked about in today’s economy. To help you make good decisions regarding bankruptcy, consult with this article and use the knowledge to your advantage.