In order to file a bankruptcy claim, you will run into more than a couple of complicated hurdles to jump. All types of bankruptcy exist. The kind that you select depends on your finances and your debt. Prior to filing, there is a lot you need to know. This information may point you in the right direction.
Do not consider paying off tax debt with credit cards and filing for bankruptcy afterward. It won’t work. In most states, this debt won’t be discharged, and you could end up owing the IRS a whole lot more. Keep in mind that if the tax debt is eligible to be discharged, then the credit card debt is also dischargeable. It is pointless to use credit cards if they can be discharged.
Before filing for personal bankruptcy, make sure you are doing the right thing. You can also avail yourself of other options, such as consumer credit counseling. Your credit record will be harmed by a bankruptcy filing, and therefore prior to making such a decision, it is wise to investigate other options in order to minimize the damage you suffer.
When bankruptcy seem inevitable it is important not to use your retirement funds or emergency savings to pay creditors. You should make every effort to leave your retirement accounts untouched until your retire. While dipping into your savings is likely to be necessary, avoid wiping it out completely to prevent leaving yourself with little financial security in the future.
Chapter 13
Consider Chapter 13 bankruptcy, if you chose to file. If your total debt is under $250,000 and you have consistent income, Chapter 13 will be available to you. Declaring bankruptcy can assist you in consolidating your debt so you can repay it more easily. This plan usually lasts from 3 to 5 years, after which, you will be discharged from all unsecured debt. Remember that you must make every payment. Missing even one could cause the court to dismiss your case.
Investigate other alternatives before resorting to bankruptcy. Before filing, talk with an attorney who can help you weigh all of your options. If a foreclosure is your reason for filing look into your options with your bank first, such as a loan modification. Your creditors will be willing to work with you to allow you to pay off your debts. They may be able to take late fees off of your account, cut down your interest, or even extend the loan’s repayment period. Many times creditors are happy to work with you to ensure that you will repay your loan.
If you meet certain requirements, you may be able to get a lower monthly payment on your financed vehicle. Sometimes, as part of the bankruptcy filing, your auto loan can be restructured so that you pay less each month. In order for this to succeed, you must have bought your car in excess of 910 days before filing, have a higher interest loan for it as well as a consistent work history.
Car loans or mortgage loans are still a possibility when you have filed for Chapter 13. It is much harder. Normally, the trustee assigned to your bankruptcy must approve any new loan. In order to show that you’re capable of paying off your new loan, prepare a budget that includes its payments. Also, you need to be ready to say why you’re going to need the item.
File when the time is perfectly right. In bankruptcy filing, timing is quite important. Sometimes you should file immediately; however, there are times when it is better to delay until the worst has passed. Have a chat with a bankruptcy specialist to discover when the ultimate time would be for you to file.
Do not use credit cards for cash advances prior to filing a bankruptcy petition, as it can affect the dischargeability of the debt. This is illegal. It’s fraud, and you can still be responsible for paying it back even after declaring bankruptcy.
Do not doddle with whether or not bankruptcy is for you. As with anything in life, putting off important things such as debt repayment can snowball quickly out of control. The time to seek out professional advice on bankruptcy is as early as possible. Your financial situation will get complex very quickly, so wise counsel is more valuable the earlier you get it.
Now you know that filing for bankruptcy requires a lot of thought. If you feel that bankruptcy best suits your current financial position, then ensure you retain an experienced attorney who can help you.
