Being severely in debt is a very frightening experience. There are times that having a small financial problem turns into a huge one. Sadly, it is not as easy to fix it once you get there. You should read ahead for great tips on how to face and handle a bankruptcy, when your debt is insurmountable.
Credit History
Think through your decision to file for bankruptcy carefully before going ahead with it. Look into credit counseling to see if it could help you work out of your debt without bankruptcy. 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.
When bankruptcy seem inevitable it is important not to use your retirement funds or emergency savings to pay creditors. You shouldn’t dip into your IRA or 401(k) unless there is nothing else you can do. Although you may need to tap into your savings, you should not use up all of it right now and jeopardize the financial security of your future.
It’s not uncommon to learn soon after bankruptcy that you are unable to get an unsecured credit card easily. In this event, you should attempt to apply for a secured card or two. You can exhibit your desire to rebuild your credit this way. Unsecured credit may be offered to you quicker than you think after doing so.
Prior to declaring bankruptcy you really need to be sure that you’ve exhausted all your other options first. One example would be that a consumer credit program for counseling if you have small debts. Negotiating with creditors is another option, but creditors are notorious for “forgetting” these agreements, so get them in writing!
Personal Bankruptcy
There are two types of personal bankruptcy: Chapter 7 and Chapter 13. Make sure you know what each entails so you can make the right choice. If you file for Chapter 7 bankruptcy, all of your debts will be eliminated. Any debts that you owe to creditors will be wiped clean. Chapter 13 is different, though. This type of bankruptcy entails an agreement to pay off your debts for five years prior to wiping the slate clean. When choosing the type of personal bankruptcy that is correct for you, it is very important that you know the differences.
It is important to protect your home when filing bankruptcy. You don’t have to lose your home just because you are filing for bankruptcy. Whether you get to keep your home depends on a few things, including its value and whether you have debts like a second mortgage or HELOC. You are still going to want to check into homestead exemption either way just in case.
If your earnings are higher than your expenses then filing for bankruptcy is a waste of time and money. Although bankruptcy may feel like a simple method of getting out of your large debt, it leaves a permanent mark on your credit history for up to 10 years.
It is important to not wait for the final minute to petition for bankruptcy. Lots of people turn the other shoulder towards their financial woes and hope that they’ll disappear eventually. However, you should never do this. All your personal debts will easily go haywire, building and collapsing very quickly. This often leads to foreclosures and garnishments. Once you realize that the debt you have is too much for you to handle, start thinking about talking to a bankruptcy attorney, they can guide you throughout the entire process.
When filing for bankruptcy, list all of your financial information. If the court thinks you are attempting to conceal information, your petition could be denied. Even if it looks insignificant, you must add it to your documents. This includes income from second or part time jobs, vehicles and loans.
If you plan to pay debts off before you file for bankruptcy, be careful. Bankruptcy law may actually prevent you from repaying your credits for three months. Worse, if you’ve taken out a loan from your family, you can’t repay them for a whole year before filing. Know the laws prior to deciding what you are going to do.
Filing for bankruptcy may damage your credit less than missing debt payments. Bankruptcy stays on your credit for quite some time. On the other hand, you can begin improving your damaged credit immediately. The best aspect of bankruptcy is the fact you can have a new start.
Although it is tempting to toss out the idea of ever owning credit cards again, think again. This isn’t necessarily a good strategy to follow because good credit is established by getting, and handling, credit responsibly. If you don’t use your credit, you won’t be able to make big purchases on credit in the future. The best way to help build your credit is to get one credit card and pay it off at the end of every billing cycle.
Some things in life are inevitable. The article above has some powerful suggestions to get things back in control and manage the issues you face when filling for bankruptcy. Apply the tips you learned from this article into your life.
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