Being severely in debt can be extremely stressful. Once that happens, the real struggle begins. The piece that follows does offer some pointers on what to do regarding bankruptcy if you are way over your head in debt.
If filing bankruptcy is in your future, don’t waste any savings you may have attempting to pay off your debts. You should never touch your retirement accounts, unless you have absolutely no choice. You may need to withdraw some funds from your savings account, but don’t take everything that is there as you will be bereft of any financial backup if you do.
Do not even think about paying your taxes with credit and petitioning for bankruptcy. In many parts of the country, the debt cannot be discharged, and in the end you will be left owing the IRS a big sum of money. This makes using a credit care irrelevant, when it will just be discharged.
The Bankruptcy Code includes a list of the types of assets considered exempt from being affected by bankruptcy. If you don’t read this list, you might be blindsided when a possession that is important to you is taken to repay creditors.
It is important to understand your rights when filing bankruptcy. When you file for bankruptcy you may be allowed to recover property like your car, electronics or jewelry that might have been repossessed. If you have been subject to a repossession during the 90 days before your filing, you stand a good change of getting your property back. Talk to your lawyer to find out how to go about properly filing a petition.
The professional that helps you choose to file with needs to know both the good and bad aspects of your finances.
Don’t pay for an attorney consultation with a lawyer who practices bankruptcy law; ask a lot of questions. Most attorneys offer free initial consultations, so talk to a few before making your decision. Only make a decision after you feel like your concerns and questions have been addressed. You need not have to give them your decision right after the consultation. You have lots of time as you need to meet with different lawyers.
Be sure to weigh all of your options before deciding to file for personal bankruptcy. There are numerous programs out there that may assist you with your debt, like a credit counseling program, a nonprofit group, government assistance, etc. Some creditors will work with you to help you pay off your debt with lower interest rates, lower late fees, or an extended loan period.
Bankruptcy Laws
Learn all the newest bankruptcy laws before filing. Bankruptcy laws change a lot and before making the decision to file, and therefore you must understand how such changes may affect your situation. Your state’s legislative offices or website will have the information about these changes.
Be certain that bankruptcy truly is your best option. It may be that all you really need to do is consolidate some of your debts. It can be quite stressful to undergo the lengthy process of filing for personal bankruptcy. It will also harm your ability to secure credit in years to come. Because of this, you should be sure that bankruptcy is your only option before you file.
Before making the decision to file for bankruptcy, make sure that a less-drastic solution isn’t more appropriate. For instance, consumer credit counseling programs can help you by renegotiating your debts with your creditors into payments that you can afford. You can also talk to creditors and ask them to lower payments, but be sure to document any get and new agreement terms in writing from each creditor.
Chapter 7
If you are making more money than you owe, bankruptcy should not even be an option. While filing may seem simple and a way to get out of paying your debts, it does tremendous amounts of long-term harm to your credit report.
Be certain that you know how Chapter 7 and Chapter 13 differ. Chapter 7 involves the best option to erase your debt. Your former ties with creditors will get dissolved. Chapter 13 bankruptcy though will make you work out a five year repayment plan that takes 60 months to work with until the debts go away.
It is important to meet with the actual attorney, because paralegals or assistants cannot give you legal advice.
It is important to be upfront with all your financial information when filing for bankruptcy. Failing to list these could cause the dismissal or delay of your bankruptcy petition. Add every summer, no matter how insignificant, to your documentation. Financial information should include all income, assets and loans.
Filing for bankruptcy does not guarantee that you will end up losing your home. It depends what your home value is and if there is a second mortgage, or there is a second mortgage. You are still going to want to check into homestead exemption because it may allow you to keep your home.
If you have a co-debtor, you need to learn how that can negatively affect anyone who shares loans with you.However, anyone sharing the loan with you may be forced to pay back the entire amount for the amount in full, they will be required to pay the debt.
Many people who have filed for bankruptcy, resolve to never use credit or credit cards again. In reality, though, credit cards can be a useful tool for people who are looking to rebuild their credit score after bankruptcy. You will not be able to get your credit back to a respectable score if you don’t use credit. You can rebuild your credit slowly, beginning with just one credit card.
Make sure that you act at an appropriate time. Timing is very important when it comes to personal bankruptcy cases.For some people, immediate filing is ideal, whereas in other cases, waiting a while is best. Speak with a bankruptcy lawyer to see when is the best time for your personal situation.
It is acceptable to find yourself overwhelmed and turn to bankruptcy to get out of trouble. Hopefully, this article’s advice has shown you that there are still plenty of steps you can take to improve your situation even when bankruptcy is in the picture. Take the advice that was given and make a difference in your life.
It’s a good idea to contact the three major credit bureaus and get fresh copies of the credit reports they have on you once your bankruptcy is a few months behind you. Be certain that the report is an accurate representation about your discharged debts and accounts for credit cards that are closed. Follow up on any discrepancies right away, so that you can begin repairing your credit.