Filing for bankruptcy is not a complicated process. There are different kinds of bankruptcy you can file, and your personal financial situation will dictate which type you should choose. The advice in this article should give you some direction as you go through the process of deciding to file and filing for personal bankruptcy.
Most people that file for bankruptcy owe a lot of money that they could not pay off. If this describes your situation, it makes sense to become familiar with relevant laws. When it comes to bankruptcy, states have varying laws. Some states may protect you home, and some may not. It is best to become familiar with your state’s laws regarding bankruptcy before you take the steps to file.
Don’t use a credit card to pay your taxes if you’re going to file bankruptcy. In a lot of places, this debt won’t be discharged, and you could end up owing the IRS a whole lot more. This means using a credit card is not necessary, since bankruptcy will discharge it.
You shouldn’t dip into your retirement savings unless there is nothing else you can do. Although it is quite normal to use some of your savings, you should not use up all of it right now and jeopardize the financial security of your future.
You should avoid paying your taxes with credit cards and then immediately file for bankruptcy. In a lot of places, the debt cannot be discharged, and you may still owe money to the IRS. In most cases, you can use the adage that “a dischargeable tax is a dischargeable debt.” There isn’t any reason to use a credit card to pay the tax bill since the bill can be discharged anyway.
Always be honest when it comes to your bankruptcy petition.
Don’t be afraid to remind your attorney of any specific details of your case. Don’t assume that he’ll remember something you told him weeks ago. This is your bankruptcy and your future, so don’t be scared to mention it.
Before you proceed with your personal bankruptcy case, review your decisions to be certain that the choice you are making is the right. You have other options, including consumer credit counseling help. Bankruptcy will be on your credit report and affect your credit score for many years to come, so it is a decision that should not be taken lightly. Try to use it as a last resort.
Don’t pay for the consultation and ask a lot of questions. Most lawyers provide a consultation for free, and you should take advantage of the chance to interview multiple practitioners. Only make a lawyer if you have met with several attorneys and all of your concerns and questions have been addressed. Take your time before you decide to file after you meet with your bankruptcy. This allows you extra time to speak with numerous lawyers.
Chapter 13 Bankruptcy
Don’t avoid telling your lawyer specific details with your case. Lawyers are people too, and sometimes they forget important information and need to be reminded. Remember that you’re the boss. You’re paying your lawyer, so you should not be afraid to have your say. After all, the quality of your life hangs in the balance.
Be sure you can differentiate between Chapter 7 and Chapter 13 bankruptcy. Chapter 7 involves the elimination of all outstanding debts. All of your financial ties to the things that tie you to creditors will go away. Chapter 13 bankruptcy allows for a payment plan to eliminate all your debts.
Bankruptcy filings don’t necessarily mean that you have to end in the loss of your home. Depending on whether the value of your home has decreased or if you have a second mortgage on the home, you might be able to keep it. You may also want to check into homestead exemption because it may allow you to keep your home.
If you make more money than you need to pay your bills, you should not file for personal bankruptcy. The cost to your credit history far outweighs the simplicity of the easy-out bankruptcy. This is a hard pill to swallow for many.
Before filing bankruptcy ensure that the need is there.You may find consolidating your debt or availing yourself of some other remedy. It is not a quick and easy process of filing for personal bankruptcy. It will affect your credit as time goes on. This is why you must make sure bankruptcy is the only option left for you.
Unsecured Debt
Look at all the alternatives to bankruptcy before filing. There are many other options including debt consolidation and making payment plans with your creditors. Look into loan modification plans if you need to deal with an imminent foreclosure. Your particular loan holders can provide a lot of assistance if you’re just willing to speak with them. You can negotiate lower rates, longer terms, and other means of repayment that may keep you from having to file a claim. Ultimately, creditors want their money, and many times repayment plans are preferable to a debtor that is bankrupt.
Consider Chapter 13 bankruptcy is an option. If you are receiving money on a regular basis and your unsecured debt is under $250,000 and have a consistent income source, Chapter 13 may be right for you. This lasts for three to five years and after this, in which you’ll be discharged from unsecured debt.Keep in mind that missed payments will trigger dismissal of your whole case to get dismissed.
Obviously you see the necessity for proper planning and decision-making in before you file. If you think it is the right choice for you, find a lawyer that can properly guide you through the process and give you a new leash on life.
After you have finished with the initial process of filing, you can relax and take a breather. Filing for personal bankruptcy can be very stressful for the debtor. It is essential to cope with this stress well, to prevent becoming depressed. Bankruptcy is hard to go through, but you must remember that a less stressful, more enjoyable life is waiting on the other side of it.