While filing for bankruptcy may be a hard decision to make, for some it is a necessity. Going through this ordeal is easier when equipped with lots of solid advice. In the following article you can pick up some handy advice based on the experiences of other people who have had to deal with the bankruptcy process.
Credit Cards
Most people end up filing for personal bankruptcy because they owe more than they make. If this applies to you, be sure that you know what the laws of your state are. There are greatly varying laws concerning bankruptcy, so it is important to make sure you are getting the correct information. For instance, your home might be protected in some states while you might lose it in others. You should be aware of local bankruptcy laws before filing.
If you are considering using credit cards to pay your taxes and then file for bankruptcy, you may want to rethink that. In most states, you will still owe money to the IRS and have to take care of the interest of your credit cards. Transferring the debt to another medium (e.g. a credit card) won’t magically make a tax debt discharagable, either. So as you can see, in this situation there is no need to use the card when the debt will be discharged when you file for bankruptcy.
It is essential that you are honest and forthright in the documentation you provide for your bankruptcy filings. Don’t hide income or assets from your lawyer or the bankruptcy trustee or you may find yourself in legal trouble.
Ask those you know if they have an attorney to recommend, instead of finding one on the Internet or in the phone book. Some companies just want to take advantage of you, so it is important that you have help from someone you trust.
If filing bankruptcy is in your future, don’t waste any savings you may have attempting to pay off your debts. You should make every effort to leave your retirement accounts untouched until your retire. Although it is quite normal to use some of your savings, ensure that you leave enough in your account for emergencies.
Always protect your house. It isn’t inevitable that you will lose your house when you file for bankruptcy. You might be able to keep your home, contingent on certain factors, such as your home decreasing in value or having a second mortgage. You should also examine the possibility of taking a homestead exemption. This could apply if your income falls below the financial threshold.
Chapter 13
You could see about filing for Chapter 13 personal bankruptcy. If you have a regular source of income and less than $250,000 in unsecured debt, you can file for Chapter 13 bankruptcy. That kind of bankruptcy allows you to hold on to your personal things and real estate while repaying your debts with a plan to consolidate your debt. This lasts for three to five years and after this, your unsecured debt will be discharged. Remember that if you even miss one payment that’s due under this plan, the court could dismiss the whole case.
Avoid paying for a consultation with the bankruptcy attorney, but do ask many questions. Almost all lawyers will give a free consultation, so meet with more than one before making a decision on whom to hire. Make a decision when all your concerns and questions have been addressed well by one lawyer in particular. It’s isn’t necessary to make a choice right away. Consulting with several attorneys will also help you find someone you trust.
Before you choose Chapter 7 bankruptcy, think about what effect that is going to have on any co-signers you have, which are usually close relatives and friends. Once you file for Chapter 7 bankruptcy protection, you no longer have legal responsibility for debts that you and any co-signers originally agreed to. Creditors, however, will hold the co-signer liable for the entire balance of the debt.
Before you decide to file, make yourself aware of the laws about bankruptcy. For example, it is against the law to transfer any assets from the filer to another for a year before filing. Also, it is against the law for a person to acquire more debt on their credit card prior to filing.
Review bankruptcy rules before you file your petition. There are some clauses within bankruptcy that could cause you upsets. If you commit severe mistakes, your bankruptcy could be dismissed. Before you go ahead, devote a little time to research and the topic of personal bankruptcy. This will make the process go as smoothly as possible.
Always protect your house. Filing for bankruptcy does not always mean you will end up losing your home. It depends what your home value is and if there is a second mortgage, as all this stuff comes into play when determining if you can keep the home. If this is not the case, find out more about Homestead Exemptions you might qualify for if you meet certain financial requirements.
While the idea of bankruptcy sounds terrible, sometimes you can’t avoid it. You should now have some excellent advice from people who have personally struggled with the bankruptcy process. By learning from others that have been in the same situation, it will make it easier on you in the long run.