If the IRS or your other creditors are on to you about the money you owe, you should consider filing for bankruptcy. Although bankruptcy tends to destroy a person’s credit, it’s occasionally the only available option. Continue reading this article to understand what you need to know about bankruptcy and the likely end result of going through one.
Ask yourself if filing for bankruptcy is the right thing to do. Other available options include consumer credit counseling. Your credit record will be harmed by a bankruptcy filing, and therefore prior to making such a decision, it is wise to investigate other options in order to minimize the damage you suffer.
You should avoid paying your taxes with credit cards and then immediately file for bankruptcy. Most of the time, you won’t be able to discharge this debt, and you could make things worse with the IRS. Transferring the debt to another medium (e.g. a credit card) won’t magically make a tax debt discharagable, either. So, in short, do not use your credit cards to pay off debts right before you file for bankruptcy.
When you feel certain that you must file for personal bankruptcy, refrain from squandering your life savings to pay off unsecured debt. You should never touch your retirement accounts, unless you have absolutely no choice. Although you may need to tap into your savings, you should not use up all of it right now and jeopardize the financial security of your future.
Before you decide to file bankruptcy proceedings, determine which assets will be safe. The Bankruptcy Code has lists of various asset types that are exempt during the process. It is important that you read this list before filing for bankruptcy, so that can find out whether or not your most prized possessions will be seized. If you fail to do so, things could get ugly.
Be honest when filing for bankruptcy. Don’t hide liabilities or assets, as they’ll come back and haunt you. Whoever provides your legal consultation must be privy to all of your financial information. Being honest is both the right thing to do and, moreover, it is required by law.
Be sure you’re doing what’s right before you file for bankruptcy. There are plenty of other options open to you, like consumer credit counseling. Bankruptcy has a negative effect on your credit reports, in that it is permanently there. Before you take this step, make sure all your options have been considered.
If you’re going to file bankruptcy, you need an attorney. It is unlikely that you will be able to comprehend all the various rules and regulations involved in bankruptcy law. A personal bankruptcy attorney can help and guide you along through the bankruptcy process.
Before making the decision to file for bankruptcy, be sure you have considered alternative options. For example, consumer credit counseling services can often help you figure out a workable repayment plan with creditors. You may also find success in negotiating lower payment arrangements yourself, but be certain to get any arrangements with creditors in writing.
Chapter 13
Determine which assets won’t be seized before filing for bankruptcy. The Bankruptcy Code lists assets considered exempt from being affected by bankruptcy. It’s crucial to read that list before filing to see which of your prized possessions can be seized. If you don’t read this list, there is a chance that you might get nasty surprises when they take your things away.
Consider filing for Chapter 13 bankruptcy. If your total debt is under $250,000 and you have consistent income, Chapter 13 will be available to you. This will allow you to keep your personal property and real estate and repay your debts via a debt consolidation plan. Generally, this stays in effect for up to 5 years. Afterwards, your unsecured debts clear from your accounts. Remember that you must make every payment. Missing even one could cause the court to dismiss your case.
Before you file for personal bankruptcy, weigh all of your options. Talk to a bankruptcy lawyer to see if a debt repayment plan or reduction in interest rates is a viable option for you instead of bankruptcy. For example, if you are in talks of foreclosure, you could use a modified loan to overcome your debt. 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. When all is said and done the creditors just want their money, and more often than not will work with you on a repayment plan.
When you file for bankruptcy, you should be very aware of your rights. There are unscrupulous debt collectors who may suggest that your obligations cannot be included in a bankruptcy. There are only three main classes of debts that are non-dischargable: taxes, child support and student loans. If you are speaking to debt collectors about another type of debt and they tell you it cannot be discharged, check your local regulations. You can report the collectors to your state attorney general if they are lying about this.
If you’re filing for bankruptcy soon, be sure you are going to hire a lawyer. Filing for bankruptcy is complicated and there is no way you can understand all you need to know. A personal bankruptcy lawyer will be able to help you and ensure you are doing things the proper way.
As mention earlier, you always have the option to file for bankruptcy. Just be sure that you do not use it as your first choice. Protect your assets and avoid even more stress by learning as much as you can before you decide to file.