Filing for bankruptcy must not be taken lightly. Read through the information in this article and use it to help you make an informed decision. Find out all the information you can before filing for bankruptcy.
Do not consider paying off tax debt with credit cards and filing for bankruptcy afterward. It won’t work. Most of the time, you cannot discharge this debt. As a result, you will owe the IRS a lot of money. The rule here is that if you can get the tax discharged then you can get the debt discharged. Thus, it doesn’t make sense to use a credit card when it is going to be discharged when you file for bankruptcy.
If you are truly faced with bankruptcy, avoid blowing your savings or retirement money, trying to pay off debts. Unless there are no other options, your retirement funds should never be touched. While you may have to use a part of your savings, never completely wipe it out which would only leave you in worse financial shape in the future.
It is imperative that you retain an experienced attorney if you are planning to file bankruptcy. Personal bankruptcy is quite complex, and it is entirely possible that you will not be able to familiarize yourself with all the laws and processes. A qualified bankruptcy attorney can guide you through the filing process.
See if there is an alternative you can use before declaring bankruptcy. For example, if your debt is small, try a type of consumer counseling program. Negotiating with creditors is another option, but creditors are notorious for “forgetting” these agreements, so get them in writing!
Always protect your house. Bankruptcy filings do not necessarily mean that you have to lose your house. It depends what your home value is and if there is a second mortgage, as all this stuff comes into play when determining if you can keep the home. You could also check out the homestead exemption. This lets you continue living in your house, depending on whether you meet certain financial requirements.
There are two different kinds of personal bankruptcy you can file for: Chapter 7 and Chapter 13. Take time to research this online and see the pros and cons for filing each one. If you’re really not sure how this all works after your research, meet with your lawyer and ask them prior to making a decision.
Chapter 7
Before you choose Chapter 7 bankruptcy, think about what effect that is going to have on any co-signers you have, which are usually close relatives and friends. You will be freed of responsibility for debts that you share if you make a successful Chapter 7 filing. However, your creditors will be able demand that your co-debtor pays the debt off in full.
Timing is everything. Timing is important, and that is especially true when filing for bankruptcy. In some cases, you should file for bankruptcy right away, but in others, there may be reasons why filing quickly would be a bad idea. Find out when the correct time is for you to file for bankruptcy from a bankruptcy legal professional.
Gain an understanding of bankruptcy law before you file. There are many traps in the bankruptcy laws that could trip up your case. Some mistakes can even lead to your case being dismissed. Before you go ahead, devote a little time to research and the topic of personal bankruptcy. This will make the bankruptcy process much simpler.
If you plan to pay debts off before you file for bankruptcy, be careful. The laws regarding bankruptcy most often prevent you from paying back some creditors for up to 90 days before filing, and friends and family for up to one year. Do your research and figure out the laws for you.
It may be counterintuitive, but in some cases, pulling the trigger and filing for bankruptcy may have better credit consequences than continuing a pattern of credit delinquencies. Your credit report will show your bankruptcy for the next ten years, but it will also allow you to start working towards repairing your credit immediately. One of the good things about bankruptcy is that you can start fresh.
Before you file for personal bankruptcy, become more fiscally responsible. You must not doing anything that will raise your current level of indebtedness for several months before filing a bankruptcy petition. Both creditors and judges take a look at what you are doing now, as well as what you have done in the past. Having recent good financial behavior, regardless of how short of a time period, is better than no good behavior at all.
Filing a claim doesn’t always result in losing possessions. Your personal items will stay with you. Things like jewelry, clothes, and electronics are included in this category. This will depend on your state’s laws, the type of bankruptcy you file for, and your financial situation, but you may be able to retain large assets like your home and car.
Even if your situation seems bleak, do not lie about anything when you file for bankruptcy. It’s a big mistake to lie about your financial situation or your assets. And it is illegal. Misrepresenting your debts or assets can land you in prison.
After reading the previous article, it is obvious that bankruptcy is not something that takes place on its own. There is a long list of items you need to do, and make sure they are done correctly. By taking what you have learned here and applying it, the process of bankruptcy will be much smoother.
