Filing for bankruptcy is still an option for anyone who has had their possessions repossessed by the IRS.Bankruptcy totally destroys your credit, at times, people have no choice but to file. The following article will provide you with all the information you need to understand the results of choosing to file for bankruptcy.
Think twice if you have struck upon the idea of paying off your taxes by credit card and subsequently filing for personal bankruptcy. The fact is that the credit card debt will be ineligible for discharge, and your tax debt may increase. If the tax can be discharged, so can the debt. Just because your credit card could be discharged in bankruptcy does not mean you should use it.
Don’t use credit card to pay off your taxes before filing for bankruptcy. In many areas of the country, this debt will not be dischargeable, and in the end you will be left owing the IRS a big sum of money. This means using a credit card is not necessary, since bankruptcy will discharge it.
You have other options available like counseling for credit that consumers can use.Bankruptcy will leave a permanent scar on your credit report and before you take this huge step, so if there are less drastic options that will solve your credit problems, to help try and limit the damage to your credit.
It is important to remind your lawyer of any details that may be important to your case. Don’t assume that he’ll remember something from a month ago; tell him again. Ultimately, this is your bankruptcy and your financial future, so never hesitate to advocate on your behalf.
Retirement accounts should be avoided at all costs. Although you may need to tap into your savings, ensure that you leave enough in your account for emergencies.
Don’t hesitate to give your lawyer about something she has missed. Don’t assume that they’ll remember something from a reminder. This is your future in their hands, so never be nervous about speaking your mind.
Make sure that you understand the difference between Chapter 13 bankruptcy and Chapter 7 bankruptcy. Chapter 7 bankruptcy is intended to wipe out all outstanding debts. This includes creditors and your relationship with them will become no longer existent. Chapter 13 bankruptcy though will make you work out a payment plan that takes 60 months to work with until the debts go away. 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.
Don’t pay for an attorney consultation and ask a lot of questions. Most attorneys offer free initial consultations, so consult with a few before settling on one. Only choose a lawyer if you have met with several attorneys and all of your concerns and questions have been addressed. You do not have to give them your decision immediately after the consultation. This will give you time to interview several attorneys.
Learn of new laws before you file for bankruptcy. Bankruptcy law has changed substantially in recent years, and you need to be aware of any changes so your bankruptcy can be properly filed. Your state’s website will have up-to-date information about these changes.
Understand the differences between Chapter 7 and Chapter 13 bankruptcy. Read up on the topic and familiarize yourself with the benefits and drawbacks of both variations. Ask your bankruptcy lawyer to clarify anything you don’t understand before making a final decision about which type of bankruptcy to file.
It is important to meet with the actual attorney, because paralegals or assistants cannot give you legal advice.
Filing for bankruptcy does not guarantee that you will end up losing your home. You might be able to keep your home, for instance, such as your home decreasing in value or having a second mortgage.You may also want to check into homestead exemption because it may allow you to keep your home.
Do not forget to make quality time for friends and family members. Going through a bankruptcy is never easy. It can be long and drawn out which adds lots of stress and leaves people feeling empty inside. A lot of people become depressed and withdrawn until their bankruptcy is discharged. However, self imposed isolation will only make you feel even worse about the process and could even lead to depression. Thus, you must keep living your life and socializing with those you love, no matter what is going on with your bankruptcy.
Chapter 13
Consider if Chapter 13 bankruptcy. If you owe an amount under $250,000 and you have consistent income, Chapter 13 may be right for you. This plan normally lasts from three to five years, your unsecured debt will be discharged. Keep in mind that even missing one payment can be enough for your case.
Do not forget to enjoy life a little once you get through the initial filing process. It can be several months between the initial filing and the final discharge of debts. Make sure you take care of your part and let your attorney do the rest. Life will surely get better after you finish this process.
Look at all the alternatives to bankruptcy before you choose to file for bankruptcy. Loan modification can be helpful for those facing foreclosure. The lender can help your financial situation by getting interest rates lowered, so they may be willing to forgive some fees, and in some cases will allow you to pay the loan over a longer period of time. When all is said and done, creditors want their money, and they are willing to make concessions to get it and prevent the debtor from declaring bankruptcy.
As mention earlier, you always have the option to file for bankruptcy. But, filing ought not to be an automatic decision, as it does have serious implications. Staying informed about how to handle this situation can save a lot of headache and allow someone to keep their valuables.
Carefully consider filing for bankruptcy on loans that have a co-signer, especially if that co-signer is a business associate, close friend or relative. You can relieve yourself of any liability for debts that you may share with someone else through a Chapter 7 filing. However, the creditors could come after your co-signer and demand full payment for the debt.