Facing repossession of your valuable items, like vehicles or jewelry, can make you feel very afraid of the Internal Revenue Service. Put your finances in order and file for bankruptcy if this is your only option to get out of debt. Keep reading for tips that will help you navigate the process successfully.
The primary catalyst for filing personal bankruptcy is having a large amount of debt that can’t be readily repaid. If this is happening to you, then learn about the laws where you live. Most states differ in their laws governing bankruptcy. In some areas, your residence may be completely exempt, but in others, it will not be. Be sure to have some familiarity with the law in your jurisdiction.
Be sure everything is clear to you about personal bankruptcy via looking at websites on the subject. The United States Some valuable resources include the U.S. Dept of Justice and American Bankruptcy Institute. As with everything in life, the more you know about filing a claim, the better off you’ll be. You can properly prepare when you know what you’re preparing for.
Don’t use a credit card to pay off your taxes before filing for bankruptcy. In a lot of places, the debt cannot be discharged, and you may still owe money to the IRS. In most cases, you can use the adage that “a dischargeable tax is a dischargeable debt.” So it does not help you to put the tax bill on your charge card if you know the debt will be discharged anyway.
Instead of jumping into a bankruptcy filing, be sure your situation requires it. Look into credit counseling to see if it could help you work out of your debt without bankruptcy. Be sure to consider all options before filing for personal bankruptcy, as this will take a large toll on your credit score for the next ten years.
Look for a bankruptcy lawyer that comes from a personal recommendation instead of someone random on the Internet or in the yellow pages. There are plenty of companies who know how to take advantage of people who seem desperate, and it’s important to be sure your bankruptcy can go smoothly; take your time and choose someone you can trust.
It can be difficult to obtain unsecured credit once you have filed for bankruptcy. If this happens to you, think about applying for a couple of secured credit cards. This will show people that you are serious about getting your credit record back in order. After some time passes they may be willing to offer you unsecured credit.
Make certain that you comprehend the differences between Chapters 7 and 13. All debt will be eliminated with Chapter 7. Your former ties with creditors will cease to exist. Chapter 13 is different, though. This type of bankruptcy entails an agreement to pay off your debts for five years prior to wiping the slate clean. You have to know what differs between all of the kind of bankruptcy, so you know which is one is ideal for you.
Protect your house. Filing for bankruptcy does not guarantee that you will lose your house. Depending on if your home’s value has gone down or if it has a second mortgage, you might be able to keep it. You should also examine the possibility of taking a homestead exemption. This could apply if your income falls below the financial threshold.
While personal bankruptcy can always be an option, don’t do it before looking at other options. Also keep in mind many debt counselling companies are scams that can get you further into debt. If you must file bankruptcy, learn from your mistakes and become a more conscientious consumer.
Be aware of recent changes, if any, in the bankruptcy code. These kinds of laws are constantly changing and it is important that you are aware of these changes, so that you can learn how to properly file for bankruptcy. A qualified bankruptcy attorney is the best source for the latest information regarding the laws in your state.