Bankruptcy is a two-sided coin: relief/stress. The negative is that you will have to allow others to delve into your personal financial situation, and be open to it. On the other, you get to enjoy the peace that comes when the bill collectors stop calling you. If you would like to make filing for personal bankruptcy much easier, simply follow the steps we present here.
Credit History
Do not use a credit card to manage your tax issues and then try to file bankruptcy. You will find few states that discharge this kind of debt. You may also wind up owing a lot of money to the IRS. Transferring the debt to another medium (e.g. a credit card) won’t magically make a tax debt discharagable, either. Thus, it doesn’t make sense to use a credit card when it is going to be discharged when you file for bankruptcy.
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 is a serious negative on your credit history so make sure you have no other options before you file. It is important to keep your credit history as positive as possible.
When it soaks in that filing for personal bankruptcy, don’t use all of your retirement funds, or all of your savings to resolve insolvency or pay creditors. You should never touch your retirement accounts, unless you have absolutely no choice. Using your savings is necessary, but decimating it and leaving yourself dangling with no future financial security is not a good idea.
After a bankruptcy, you may not be able to receive any credit cards. This being the case, look at secured card options. You can exhibit your desire to rebuild your credit this way. After using a secured card for a certain amount of time, you might be offered an unsecured card once again.
When it soaks in that filing for personal bankruptcy, don’t use all of your retirement funds, or all of your savings to resolve insolvency or pay creditors. Retirement accounts should never be accessed unless all other options have been exhausted. You may need to withdraw some funds from your savings account, but don’t take everything that is there as you will be bereft of any financial backup if you do.
Be aware of recent changes, if any, in the bankruptcy code. Bankruptcy laws constantly change and it’s crucial you know about them so you the process of filing for bankruptcy goes smoothly. A qualified bankruptcy attorney is the best source for the latest information regarding the laws in your state.
Chapter 7
Be certain to grasp the distinction between Chapter 7 and Chapter 13 bankruptcy cases. If you file for Chapter 7 bankruptcy, all of your debts will be eliminated. You will no longer be liable for any money that you owe to your creditors. With a Chapter 13 bankruptcy, you will have to make payments for 5 years before the debts are forgiven. To make the wisest choice, you will need to understand the consequences of each of these two options.
Don’t feel bad if you need to remind your attorney about any specifics of your case. You should not take for granted that your lawyer will remember every important detail that you have have told him earlier without a reminder. Don’t fear speaking up since it affects your case and future.
It is important to know how Chapter 7 filings differ from Chapter 13 filings. Get a good grasp of the pluses and minuses each type of filing involves by researching both of them extensively. If the information you read is unclear to you, take the time to go over the specifics with your lawyer before making a decision on which type you will want to file.
Bankruptcy is characterized by both positive and negative aspects. Regardless of your reason for filing, be aware information is the closest friend you have during the entire thing. What you read above can easily help you get a handle on the entire process. Apply all of the knowledge you have gained from this article and you will be on your way to feeling more at ease about your bankruptcy.