Being in debt can be extremely stressful. Once you realize how much in debt you are, it can make you lose your focus on everything else in life. Unfortunately, it’s not easy to fix them when that happens. The article you are about to read will give you advice on dealing with your debts through bankruptcy.
Before making the decision to file for bankruptcy, be sure to do some research and learn all you can about the subject. There are many websites available that offer this information. The US Department of Justice and American Bankruptcy Institute are two such places to look. The more you know, the better prepared you will be to make the best decisions and ensure that your bankruptcy goes smoothly.
Don’t think that loading up your credit card with tax debt and then filing for bankruptcy is an answer either. In some places the debt can not be discharged, and you may still need to pay the IRS afterward. The main thing to remember is that dischargeable taxes are the equivalent of dischargeable debts. Therefore, you should not pull your credit card out for purchases if it is just going to be discharged during the bankruptcy.
Credit Card
Do not use a credit card to pay income taxes and then file for bankruptcy. In most states, this debt won’t be discharged, and you could end up owing the IRS a whole lot more. The main thing to remember is that dischargeable taxes are the equivalent of dischargeable debts. There isn’t any reason to use a credit card to pay the tax bill since the bill can be discharged anyway.
When it gets time to think about bankruptcy, avoid using your retirement or savings to pay off the creditors or even make attempts to settle the debt. You should not use your retirement savings unless the situation calls for it. You may need to tap your savings, but don’t empty your savings account, as this could leave you in a difficult situation down the road.
When it appears likely that you will file a petition, do not start spending your last remaining funds on debt repayment. You should never touch your retirement accounts, unless you have absolutely no choice. Your savings accounts offer valuable financial security so try to leave them intact.
Educate yourself about state bankruptcy laws and possible outcomes before filing your petition. Bankruptcy law has changed substantially in recent years, and therefore you must understand how such changes may affect your situation. To find out about these changes, you can look at your state’s legislation website or contact their office.
There are differences between Chapter 13 bankruptcy and Chapter 7; be sure to familiarize yourself with both. Take the time to find out about each one online, and look at the advantages and disadvantages of each. If you do not understand what you are reading, talk to your attorney before making that serious decision.
If you make more money than you need to pay your bills, you should not file for personal bankruptcy. Although bankruptcy may feel like a simple method of getting out of your large debt, it leaves a permanent mark on your credit history for up to 10 years.
One critical element for anyone filing a petition for bankruptcy is to be honest in everything you do. You can lose the right to file bankruptcy now or in the future if you try to withhold information about your assets and income. So it is critical that you disclose everything honestly to to avoid that and any other penalties the trustee might impose if he discovered your attempt to hide information from the court.
It can be easy for life to feel like it is spinning out of control when you are having financial troubles. This article should have been instrumental in helping you figure out what to do next for your financial path. Incorporate the advice given and see how it can make a huge change in your life.