Having to file for personal bankruptcy is never a positive experience. The need to file for bankruptcy is usually the result of misfortune. The process can be embarrassing and can cause a person to feel secretive when it comes to finance. Using the tips in this article, you can learn how to avoid bankruptcy and get your finances on the right track.
If you are considering using credit cards to pay your taxes and then file for bankruptcy, you may want to rethink that. Generally speaking, taxes are not a dischargeable debt. The delays caused by this sort of tactic could leave you owing the IRS a great deal in interest and penalties. Should the tax be dischargeable, the debt is often dischargeable as well. Therefore, you should not pull your credit card out for purchases if it is just going to be discharged during the bankruptcy.
Generally bankruptcy is filed when a person is facing insurmountable debt. If this is happening to you, then learn about the laws where you live. 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. Do you research about legal ins and outs in your state before you begin the bankruptcy process.
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.
Never pay for a consult with a bankruptcy lawyer, and ask plenty of questions. You can meet with a few lawyers before deciding on one. Most lawyers provide a free initial consultation. The lawyer who properly answers your questions is the one you should hire. There is no need to offer an immediate hire, so take your time. This will give you extra time to interview several attorneys.
Chapter 7
As bankruptcy appears on the horizon, don’t take your savings or retirement accounts to try to pay off all your bills. 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.
Understand the differences between Chapter 7 and Chapter 13 bankruptcy. All debt will be eliminated with Chapter 7. Your former ties with creditors will cease to exist. A Chapter 13 filing involves a repayment plan, though. Typically, you will make a partial payment against your debts over the next 60 months before the balance of the debts is lifted. Take the time to learn more about these different options so you can make the best decision possible.
Be sure you know what the difference between Chapter 13 and Chapter 7 bankruptcy is. Read up on the topic and familiarize yourself with the benefits and drawbacks of both variations. If you are confused by what you find, be sure to ask your attorney to explain anything that is unclear before you make your decision about filing.
Chapter 7
Don’t file for bankruptcy until you know what assets of yours can and can’t be seized. The Bankruptcy Code provides a list of all the different kinds of assets that you can exclude. You can determine exactly which of your possessions are at risk by consulting this list before you file. 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.
Make sure you consider implications of bankruptcy before filing for Chapter 7. 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. Although filing for bankruptcy excludes your from financial responsibility, co-signers will still be expected to pay the loan amount in full.
A great tip to remember if you have filed for Chapter 13 is that you will still be able to receive a loan, so you shouldn’t refrain from trying. However, it will be a longer and more arduous task. You will have to see your trustee and the approval for this new loan. Draw a budget up and show how you can pay the newer loan payment. An explanation of need will also be necessary.
Look at bankruptcy as a chance to mature and take responsibility for your personal finances. It is not uncommon for bankruptcies to elicit feelings of guilt, remorse and embarrassment. However, having this feeling about yourself isn’t going to help anybody, and your health could even be compromised. Having the right outlook during a tough financial upheaval is a great attitude in coping with bankruptcy.
If you are seriously thinking of filing bankruptcy, make sure that you contact an attorney. You might not understand all of the various aspects to filing for bankruptcy. When you engage the services of a bankruptcy lawyer, you can be assured of getting the help your need to proceed correctly.
See to it that you are aware of the laws concerning bankruptcy before you consider filing. For instance, somebody cannot transfer assets from a filer’s name up to a year after they file. It’s also prohibted to run up debt on credit cards just prior to filing.
Financial Information
When filing for personal bankruptcy, always supply all of your financial information. Failing to disclose all of your financial information can cause your bankruptcy petition to be dismissed, or, at the very least, delayed. No matter how insignificant a sum seems, include it in the documentation. This includes any jobs you have on the side, any vehicles you have and any outstanding loans.
Before making your decision to file for bankruptcy, double-check to see if other, less drastic options could make sense. For example, if your debt is small, try a type of consumer counseling program. Sometimes you can negotiate a reduced payment, though you must strive to get it all in writing.
Before you file your petition, be sure that you understand personal bankruptcy rules. There are several pitfalls with personal bankruptcy that can make your case harder to handle. Some mistakes can even lead to your case being dismissed. Before you begin bankruptcy proceedings, research as much as you can. Doing so will make the process a lot easier.
Look into other options before deciding to file for bankruptcy. One option to consider is credit counseling. You can get the help you need from a variety of non-profit credit counseling companies. They will liaise with those you owe money to and try to get better payment options opened to you. You pay the organization, and they pay creditors for you.
Don’t take big cash advances off your credit cards in the days prior to filing for bankruptcy. This will be viewed as fraud, and you may be held responsible for the balances despite your bankruptcy filing.
Before you file for bankruptcy, make sure you absolutely need to. Consider whether debt consolidation may be a more viable alternative. Bankruptcy is not a simple, breezy course of action that should be taken lightly. It will also harm your ability to secure credit in years to come. You only want to file for bankruptcy after you have exhausted your other options for dealing with your debts.
As you have learned, bankruptcy can be avoided. By using this article you will be well on your way to avoiding bankruptcy. Put this advice to work in your life so that you can avoid damaging your credit rating.