Bankruptcy can be tough. Your financial options become very limited. Although, this situation should not get you down because there are items you can still get like a home loan or car, continue on and learn how.
Retirement Accounts
Don’t use credit cards to pay your taxes if you’re going to file bankruptcy. In many parts of the country, you cannot get this debt discharged, and in the end you will be left owing the IRS a big sum of money. Remember that if you can discharge the tax you can discharge the debt. Thus, it doesn’t make sense to use a credit card when it is going to be discharged when you file for bankruptcy.
Avoid exhausting your savings or emptying your retirement accounts to pay off creditors if you are considering filing for bankruptcy. You should never touch your retirement accounts, unless you have absolutely no choice. 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 despair, as it’s not the end of the world. Certain property cannot be repossessed while you are in the process of filing for bankruptcy so be sure to learn about the laws in your state. If you have been subject to a repossession during the 90 days before your filing, you stand a good change of getting your property back. Get help from your lawyer to file a petition so you can get your items back.
Check into less drastic solutions prior to declaring bankruptcy. Those with smaller debts may find use in a program for consumer credit counseling. You may have luck negotiating lower payments by dealing directly with creditors, but be sure to document any get and new agreement terms in writing from each creditor.
Don’t avoid telling your lawyer specific details with your case. Lawyers are people too, and sometimes they forget important information and need to be reminded. This is your bankruptcy case, so do not be afraid to remind your lawyer of any key facts.
Chapter 7
Take into consideration all the ramifications of a Chapter 7 bankruptcy. Filing for this can impact any co-debtors, such as friends or family. When filing for Chapter 7, you won’t be responsible legally for debt signed by co-debtors and yourself. This does not dissolve any co-signers of the debt, and your creditors will continue to try and collect from them.
Take action when the time is right. Timing is everything, especially in personal bankruptcy filings. In some situations it is best to file as soon as possible, but in other situations it is best to wait until after you’ve gotten through the worst of it. Consult with an attorney who specializes in bankruptcy so you know when it is a good time to file.
You should not have to pay for a consultation with a bankruptcy attorney. Make sure you ask lots of questions. Almost all lawyers will give a free consultation, so meet with more than one before making a decision on whom to hire. Only choose a lawyer if you feel like your questions were answered. It is not necessary to come to a decision immediately following the meeting. You have lots of time for consulting with other lawyers.
If you believe that bankruptcy proceedings may be the answer to your financial woes, you should make haste to learn about the process. It can be difficult to ask for help, but as you wait, you accrue more debt. If you talk to a financial professional, they can assess your situation and give you suggestions on what could solve the problem.
It is not uncommon for those who have endured a bankruptcy to promise to never utilize credit again. This is not a good decision on their part because credit cards help in building good credit. If you never work on rebuilding your credit after a bankruptcy, you may not be able to qualify for a car loan or mortgage. Choose a single card to get started on your credit repair journey.
In time you will leave the effects of bankruptcy behind you and resume your normal life. Lenders will look more favorably upon you if you show them that you are trying to save money and make whatever payments you can. So implement a savings program, and watch how much it helps you when you need to apply for a home or car loan.
Always weigh your options carefully prior to deciding to dive head first into filing a bankruptcy claim. For example, there are credit counseling services that can help you to deal with smaller amounts of debt. You should also try negotiating a payment plan with your creditors; make sure you get a written agreement of the new payment plans.