Personal bankruptcy–the process can be complex and confusing. There are different types of bankruptcy, and the type that you choose depends upon your personal finances and the nature of your debts. You should learn as much as possible about personal bankruptcy if you are trying to make a decision to file or not. The following tips can help you get started.
Have a good look around the Internet to see what information is relevant to you regarding bankruptcy. The United States Department of Justice, the American Bankruptcy Institute and the National Association of Consumer Bankruptcy Attorneys, all provide valuable information. Knowing is half the battle, after all, and these websites are the first step in learning what you need to know to make your bankruptcy smooth and stress-free.
Don’t use credit cards to pay your taxes if you’re going to file bankruptcy. 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. In most cases, you can use the adage that “a dischargeable tax is a dischargeable debt.” So using your credit card to pay off your tax obligations, then filing for bankruptcy, can actually hurt you instead of help you.
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. Many belongings may become eligible for repossession or seizure after filing for bankruptcy. If you do not read this list, you could be in for some nasty surprises in the future, if some of your most prized possessions are seized.
Don’t pay for the consultation with a lawyer who practices bankruptcy law; ask a lot of questions. Most lawyers offer free consultations, so consult with a few before settling on one. Therefore consult with different lawyers and get a feel for them, then decide which one suits your needs You do not have to give them your decision right after the consultation. Take your time, and schedule consultations with more than one lawyer.
Stay up to date with any new bankruptcy filing laws. Make sure to get the most up-to-date information concerning the bankruptcy laws in your state. Your state’s website should have the information that you need.
Ask yourself if filing for bankruptcy is truly your best option. There are plenty of other options open to you, like consumer credit counseling. If you file for bankruptcy, a mark is permanently left on your credit. Therefore, before you do this, you should utilize all the other options that you have.
Don’t file for bankruptcy unless it’s absolutely necessary. You may find consolidating your debt may be simpler. Filing a claim can take a long time and cause much stress. Having a bankruptcy on your record will hinder your ability to get credit in the future. So, consider bankruptcy only as a last resort when you have no other choice.
Repayment Plans
Don’t automatically assume that bankruptcy is your only option. You may qualify for alternatives such as debt repayment plans or interest rate reductions. Ask your bankruptcy attorney about these options. Loan modification plans on home loans are a great example of this. Your lender can help you get current on your loan by offering you one of a number of modifications, such as getting rid of late charges, lowering interest rates, or extending the length of the loan. When all is said and done, creditors want their money and find repayment plans preferable to not getting paid at all.
As bankruptcy appears on the horizon, don’t take your savings or retirement accounts to try to pay off all your bills. Retirement funds should be avoided at all costs. 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.
As you can see, you should give bankruptcy a lot of thought before deciding whether or not you should file. If bankruptcy is sensible option for you, a good and experienced bankruptcy attorney is a must have to help you begin the process of starting your financial situation anew.