Being faced with the decision to file for bankruptcy can put you under a lot of stress. It can seem like your financial options are limited. However, even if you have a poor credit score, you can still live your life and get some of the things you are looking for, like a car or a home.
Lots of people have to claim bankruptcy when their bills are larger than their income. When you are faced with this issue, begin to familiarize yourself with your state’s laws. Most states differ in their laws governing bankruptcy. For instance, in some states you can keep your home and car, while other states prohibit this. Know what the laws are in your state before filing.
If filing bankruptcy is in your future, don’t waste any savings you may have attempting to pay off your debts. You should not use your retirement savings unless the situation calls for it. Of course you will have to touch some of your savings to get through all of the hearings, but do not put out any money that you do not have to by law.
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. Bear this in mind; if the tax can be discharged, then the debt can be as well. Therefore, you have no reason for use of a credit card, if the amount is to be discharged in due process of the bankruptcy.
Credit History
Before filing for personal bankruptcy, make sure you are doing the right thing. You have better options. For example, you could try credit counseling. Bankruptcy leaves a permanent mark on your credit history, so before you take such a large step, you want to exhaust all other options so that the future effects on your credit history are as minimal as possible.
Be as honest as you possibly can when filing for bankruptcy; hiding liabilities or assets will only hurt you in the long run. Your attorney and trustee should be privy to all information about your finances. Do not leave anything out and come up with smart plan to manage the situation you are dealing with.
When bankruptcy seem inevitable it is important not to use your retirement funds or emergency savings to pay creditors. No matter what you do, do not touch your personal savings unless there is no other option. You may have withdraw from your savings every now and then, but try to leave yourself some financial security for the future.
Even if you have filed for bankruptcy you now realize that this does not limit you in life forever. If you are willing to work hard to save money and do not spend frivolously, you can regain your credibility with creditors. Start saving to see just how much of an impact the change makes when people see you go for a home or car loan.