Bankruptcy is a decision that should not be lightly considered. Learn everything you can beforehand.
Do not consider paying off tax debt with credit cards and filing for bankruptcy afterward. It won’t work. Most of the time, you won’t be able to discharge this debt, and you could make things worse with the IRS. If the tax can be discharged, so can the debt. So, there is no reason to use your credit card if it will be discharged in the bankruptcy.
If this is your case, you should know all about the laws that are in your state. Each state has its own set of rules regarding personal bankruptcy. For example, in some states you can keep your home and car, while other states prohibit this. You should be aware of local bankruptcy laws for your state before filing for bankruptcy.
Retirement funds should be avoided at all other options have been exhausted. 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.
Do not be afraid to remind your attorney of important specifics of your case. Do not assume that if you’ve already told him or her something important once, that they will remember it later without a reminder. Speak up. This is your life, and your future depends on it.
Unsecured Credit
You may still have trouble receiving any unsecured credit card or line after emerging from bankruptcy. If so, think about applying for a couple of secured credit cards. This will be a demonstration of the seriousness with which you want to improve your credit record back in order. After a time, you may be able to get unsecured credit again.
Do some research to find out which assets you could lose by filing for personal bankruptcy. Bankruptcy exemptions are properties may not be seized during bankruptcy. You need to read the exemptions for your state, so you know what property you can protect. If you aren’t aware of this, you could lose some assets that you value.
The federal statutes covering bankruptcy can tell you exactly which assets considered exempt from forfeiture to pay off creditors. If you are not aware of the rules, you might find yourself getting surprised when your favorite things are repossessed.
The professional that helps you choose to file with needs to know both the good and bad aspects of your finances.
Make sure you consider implications of bankruptcy before filing for Chapter 7. You can relieve yourself of any liability for debts that you may share with someone else through a Chapter 7 filing. This does not dissolve any co-signers of the debt, and your creditors will continue to try and collect from them.
Don’t pay for the consultation and ask a lot of questions. Most lawyers will meet with you for free and give you helpful advice, so talk to a few before making your decision. Only make a lawyer if you have met with several attorneys and all of your questions were answered. You don’t have to make your decision before making a commitment. You can take as much time for consulting with different lawyers.
Before declaring bankruptcy, be sure you have considered alternative options. For example, a consumer credit counseling program may be a better bet if your debts are relatively small. You may have luck negotiating lower payments by dealing directly with creditors, but make sure that you get written records of any debt modifications to which you agree.
Filing for bankruptcy can cause stress. The best way to lessen this stress is to employ a lawyer, who can handle most of it for you. Don’t make your choice to retain a particular lawyer simply because they are the cheapest. Your lawyer does not necessarily have to be the most expensive one; however, you should be certain of his or her qualifications and abilities. Do not choose an attorney until you have interviewed them, checked with the better business bureau and checked their standing with the bar association. You might be able to view a court hearing. You might be able to watch how your prospective attorney handles the case.
Chapter 7
Be certain that you can differentiate between Chapter 7 and Chapter 13 differ. Chapter 7 involves the best option to erase your debt. This type of bankruptcy ends any relationship with creditors. Chapter 13 bankruptcy though will make you work out a five year repayment plan to eliminate all your debts.
Make certain that you are fully aware of each and every bankruptcy law prior to even considering filing. You should not transfer your assets to anyone in the year preceding your bankruptcy filing. It is also illegal for someone who files for bankruptcy to drastically increase their debts on credit cards immediately before filing.
Understand the differences between Chapter 7 bankruptcy and a Chapter 13 bankruptcy. Take the time to learn about them extensively, and look at the advantages and disadvantages of each.If anything you see is unclear or doesn’t make sense, meet with your lawyer and ask them prior to making a decision.
Consider if Chapter 13 bankruptcy for your filing. If you owe an amount under $250,000, Chapter 13 will be available to 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.
Even if you start a new job prior to declaring bankruptcy, do not change your plans! It may still be a good idea to go ahead with the bankruptcy. Choosing when to file can have a big impact. Should you file prior to earning your first paycheck, that money will not be considered when it comes to how you will repay.
Look into 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, the creditors want their money, and they are willing to make concessions to get it and prevent the debtor from declaring bankruptcy.
As you’ve read, bankruptcy isn’t as simple as it might sound. When you file for bankruptcy, things must be done the right way. If you apply this advice, you are certain to be prepared when bankruptcy rears its ugly head.
Some lawyers offer a free phone line so creditors may be referred there when they make attempts to contact you about your delinquent accounts. All you have to do is give the creditors this number. Then, they can call this number to confirm you are actually going through bankruptcy. This can stop collectors from harassing you at home.