Filing for bankruptcy is always a bad thing. Many people feel embarrassed or ashamed if they have to tell other people that they are bankrupt. Read this article to learn more about bankruptcy and make the best decision.
Filing for bankruptcy is something many people are forced to do when there debts become too much of a burden, and they can no longer afford to pay them. If this sounds familiar, you should read up on the bankruptcy laws in your state. Most states differ in their laws governing bankruptcy. For instance, some states protect you from losing your home in a bankruptcy, but others do not. Make sure you know the laws where you live before you file.
Before undertaking the bankruptcy process, ensure you have made the correct decision. Look into other options, such as consumer credit counseling. Before you take the drastic move of filling for bankruptcy and living with a long lasting bad credit history, make sure to consider using another way that may not be as damaging to your credit.
If possible obtain a personal recommendation for a bankruptcy lawyer instead of randomly choosing one. There are many companies who take advantage of financial desperation; that is why it is important that you get someone that is trustworthy.
Chapter 13
Before filing for bankruptcy, determine whether Chapter 13 or Chapter 7 is appropriate for your financial situation. Every one of your debts will be gone if you decide to go with Chapter 7. Any debts that you owe to creditors will be wiped clean. With a Chapter 13 bankruptcy, you will have to make payments for 5 years before the debts are forgiven. You need to determine which type of bankruptcy is right for you given your unique financial situation.
Always protect your house. You do not have to lose your home in the process of a bankruptcy. Depending on if your home’s value has gone down or if it has a second mortgage, you might be able to keep it. There are also homestead exemptions which, depending on your other finances, may allow to remain in your home.
Learn the differences between Chapter 7 bankruptcy and Chapter 13 bankruptcy. Research both types of bankruptcy online, and weigh the positives and negatives each would offer you. Engage your attorney in a conversation about each type, and ask him to answer any questions you may have before deciding which kind is right for you.
When you are looking at a Chapter 7 personal bankruptcy, you may well have debts to worry about for which you share responsibility with another person, such as a spouse, family member, or business partner. When you file under Chapter 7, you will no longer be legally responsible for any debts that were signed by yourself and a co-debtor. Although, your creditors may insist that the co-debtor pay off the entire debt.
Before you decide to file, make yourself aware of the laws about bankruptcy. There are many pitfalls you can easily fall into, such as transferring away assets to prevent them from being included in the filing. Other laws you need to know include debt-based regulations. You cannot increase debt via credit cards prior to filing a claim. Your finances basically have to remain frozen.
If you are planning to file bankruptcy, avoid taking large cash advances from credit cards thinking that the debt will be erased. This is fraud, and even if your other debts are discharged, you will have to pay the money back.
It is possible that a bankruptcy might actually be smarter over the long term than struggling month to month with consistently late or missing payments. Yes, the bankruptcy will stick around for a whole ten years, but the clean slate you get from filing will help you get back on the right track quickly. In other words, bankruptcy can give you an opportunity to start over if handled correctly.
Lots of people who file for bankruptcy say they will never use credit cards again. That is not a great idea, because using credit builds better credit. If you do not rebuild your credit rating, you will not be able to buy a car or a home on credit again. To start, use one credit card sparingly and pay it off in full each month.
As you can see, you do not have to resort to bankruptcy. Use the tips you just read to make the best decision possible. By using the advice you have learned here, you will find big changes in your life, and you can avoid damage to your credit score.
