Declaring bankruptcy is anything but easy. Several different types or “Chapters” of bankruptcy are available to you. Depending on the state of your finances and the type of debt that you have accrued, you may qualify for one type of bankruptcy, but not another. It is essential to learn as much as you can about bankruptcy before choosing to file. This article is a great place to start learning this information.
Credit History
Consider all options before deciding to file for personal bankruptcy. You have other options, including consumer credit counseling help. Bankruptcy is a serious negative on your credit history so make sure you have no other options before you file. It is important to keep your credit history as positive as possible.
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. Retirement accounts should never be accessed unless all other options have been exhausted. Your savings accounts offer valuable financial security so try to leave them intact.
Don’t hide assets or liabilities when filing for bankruptcy. The person you choose to file with needs to know both the good and bad aspects of your finances. Don’t hold anything back and formulate a smart strategy to deal with the reality you are facing.
Think carefully about your different options before filing for bankruptcy. For example, there are credit counseling services that can help you to deal with smaller amounts of debt. You could even negotiate for lower payments. However, you should ensure that you always obtain a written record of all the changes to your debt that you’ve agreed to.
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. Be certain to speak with an attorney, not their paralegal or law clerk, since they cannot give legal advice. Look for an attorney until you find one you feel comfortable with.
Be sure your home is well protected. It isn’t inevitable that you will lose your house when you file for bankruptcy. It may be possible to keep your home if the value has depreciated, or there is a second mortgage. You should also examine the possibility of taking a homestead exemption. This could apply if your income falls below the financial threshold.
Chapter 13
Consider if Chapter 13 bankruptcy is an option. You are eligible for filing bankruptcy under Chapter 13 if you work and owe less than $250,000. The benefit of this plan is that you retain personal belongings and private real estate and your debts are repaid by an organized payment plan. These kinds of plans usually range across 3, 4 and 5 years. Once this is done, all your unsecured debt will get discharged. Remember that you must make every payment. Missing even one could cause the court to dismiss your case.
Don’t forget to enjoy your life once your finances get fixed. It is common for people to stress when filing. This stress could actually cause depression, if you don’t combat it. Life will get better after you finally get this situation over with.
Before you decide to file for Chapter 7 bankruptcy, consider how it could affect other people on your credit accounts, such as family members or business partners. When filing Chapter 7, you are not legally responsible for the debts in your name. However, your creditors will be able demand that your co-debtor pays the debt off in full.
You can take out a mortgage or car loan while filing Chapter 13 bankruptcy. But, it could be harder. You need to speak with your trustee so that you can be approved for a new loan. In order to show that you’re capable of paying off your new loan, prepare a budget that includes its payments. You will also need to explain why it is necessary for you to take out the loan.
Bankruptcy is a challenging time and can create a huge amount of mental and emotional stress. To avoid getting too stressed, make sure you hire a reputable bankruptcy attorney. Don’t skimp when hiring a good lawyer. There is no need to use an expensive attorney. The important thing that you must do is to get a good attorney. Ask people who have used a bankruptcy lawyer for referrals, look them up at your local Better Business Bureau, then schedule free consultations in order to interview them. Often, watching a bankruptcy proceeding can give you clues to the quality of a lawyer.
Don’t wait until it is too late to file for bankruptcy. Some people will just ignore their outstanding debts, hoping that someone or something will come and save them, but this never ends well. It doesn’t take long for debt to become unmanageable, and not taking care of it could eventually lead to wage garnishment or foreclosure. When you make the connection that your debt level is too high, contact an attorney that specializes in bankruptcy as soon as possible, to see what can be done.
You have probably realized that you should carefully evaluate your decision to file for bankruptcy before proceeding. If bankruptcy is sensible option for you, a good and experienced bankruptcy attorney is a must have to help you begin the process of starting your financial situation anew.
