The truth is that no one wants to go through bankruptcy, but it may be the only conceivable way to get out from the mounting debt. Bankruptcy is usually a last resort and understanding the process is important. This article will give you some great advice to help decide if filing for bankruptcy is the right option for you.
Credit Card
You should avoid paying your taxes with credit cards and then immediately file for bankruptcy. Most of the time, you won’t be able to discharge this debt, and you could make things worse with the IRS. Transferring the debt to another medium (e.g. a credit card) won’t magically make a tax debt discharagable, either. This means using a credit card is not necessary, when it will just be discharged.
If you are faced with the choice of filing for bankruptcy or using your emergency fund or retirement accounts to pay creditors, opt to file for bankruptcy. No matter what you do, do not touch your personal savings unless there is no other option. Of course you will have to touch some of your savings to get through all of the hearings, but do not put out any money that you do not have to by law.
Find out what you exemptions are prior to filing bankruptcy. The Bankruptcy Code provides a list of all the different kinds of assets that you can exclude. You can determine exactly which of your possessions are at risk by consulting this list before you file. If you fail to do so, things could get ugly.
Learn of new laws prior to deciding to file for bankruptcy. Bankruptcy laws are in constant flux, so just because you knew the law last year doesn’t mean that the laws will be the same this year. To find out about these changes, you can look at your state’s legislation website or contact their office.
Check into less drastic solutions prior to declaring bankruptcy. For example, you may want to consider a credit counseling plan if you have small debts. Sometimes you can negotiate a reduced payment, though you must strive to get it all in writing.
Chapter 7
The two main kinds of bankruptcy are Chapter 7 and Chapter 13. Make sure you understand them so you know what is best for you. The Chapter 7 variety can help you eliminate your debts almost entirely. This type of bankruptcy ends any relationship you might have with creditors. 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. It’s crucial that you know the differences between all of the various kinds of bankruptcies so that you may choose the best option for your situation.
Since the majority of attorneys are willing to provide no-cost initial consultations, it is smart to meet with more than one before you make a selection. Always ensure that the person you meet with is a real lawyer, not a legal assistant or paralegal. These people can’t give legal advice. Hiring a lawyer could help you become comfortable with the legal things that you will encounter.
If you make more money than what you owe, filing for bankruptcy is not a good option. The cost to your credit history far outweighs the simplicity of the easy-out bankruptcy. This is a hard pill to swallow for many.
Bankruptcy can be overwhelming to most people, and can be quite stressful. You need to do your research to find a good bankruptcy lawyer. Get recommendations and look into other qualifications rather just choosing based on cost alone. You don’t have to use the most expensive attorney; you just need a good quality attorney. Do not choose an attorney until you have interviewed them, checked with the better business bureau and checked their standing with the bar association. If you want to know more about a specific lawyer, attend a court proceeding and see how the attorney handles herself.
Do not get sizable cash advances from credit cards before filing for bankruptcy because you think the debt from the cards will be erased., If you were to do this you could be charged criminally with fraud, because the act is intended to rip off the company.
When thinking about filing for bankruptcy, it is best not to waste precious time. It is absolutely difficult to admit you require help. On the other hand, the longer you delay, the more debt you rack up. By talking to a professional, as soon as possible, they can give you some advice on things you can do before it all gets too complicated.
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. While the bankruptcy will appear on your credit report for the next decade, you can start repairing your damaged credit right away. A major benefit of the bankruptcy process is the ability to essentially start over.
Once you go bankrupt, you will need solid advice on what action to take. The more you know, the easier everything is going to be. The article that you just read offered valuable information which you can use to help alleviate some of the stress when dealing with your financial situation.
