When you’re indebted to people or institutions, it’s only a matter of time before they show up at your door to collect. Sometimes literally. End calls from debt collectors and gain control over your finances by filing for bankruptcy. Read on to see how to get through the process.
Exhaust every other option before making the decision to file for personal bankruptcy. You have better options. For example, you could try credit counseling. Bankruptcy will leave a permanent scar on your credit report and before you take this huge step, you should search through every available option first, to help try and limit the damage to your credit.
Prior to filing for bankruptcy, research which assets will remain exempt from creditors. There are some assets that cannot be seized through bankruptcy, and the law lists those assets. It is important that you read this list before filing for bankruptcy, so that can find out whether or not your most prized possessions will be seized. If you aren’t aware of this, you could lose some assets that you value.
Learn of new laws prior to deciding to file for bankruptcy. Laws are subject to change, and it’s important that you’re educating yourself about current code only. To stay up-to-date on these laws, check out your state’s government website.
Prior to declaring bankruptcy you really need to be sure that you’ve exhausted all your other options first. For example, if your debt is small, try a type of consumer counseling program. It may also be possible to get lower payments, but if you do, be sure to obtain records for any consensual debt modifications.
Protect your home. Filing for bankruptcy doesn’t automatically involve losing your home. You might be able to keep your home, for instance, if you have two mortgages or if your home has lost its value. You should also examine the possibility of taking a homestead exemption. This could apply if your income falls below the financial threshold.
Isolate Yourself
Don’t isolate yourself from family and friends. The process of bankruptcy can seem brutal. The long process can leave people stressed out and racked with guilt and shame over having their financial affairs laid out for everyone to see. Many people decide to hide away from the world until the process is over. Do not isolate yourself or you will put yourself at risk for depression. Because of this, you need to make sure you spend as much time as you can with your family and friends, even if you are ashamed of your finances.
Don’t file for bankruptcy the income that you get is bigger than your bills. Although you may see bankruptcy as a free pass to eliminate your debt, if you can slowly whittle away at your debt with your income, it will be much better than killing your credit score with a bankruptcy filing.
Consider all options before filing for bankruptcy. Consult with a bankruptcy attorney to see if an interest rate reduction or debt repayment plan is an alternative to filing for bankruptcy. If a foreclosure is on your horizon, look into loan modification plans. There are many ways in which a lender can make adjustments that will be helpful to you. Among them are extending the loan, forgiving late charges and reducing the interest rate. Most creditors will be willing to work out an option to avoid not getting paid at all.
Before you file, make sure you understand the laws as much as possible. There are often laws prohibiting the transfer of money from the filer for a certain period preceding the bankruptcy filing. It is also illegal for someone who files for bankruptcy to drastically increase their debts on credit cards immediately before filing.
Whenever you file a petition for bankruptcy, do not leave out any information about your finances or assets. 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. Some things to be included are: current loans, valuable vehicles and side jobs.
Personal Bankruptcy
Learn about the personal bankruptcy rules before petitioning. There are many issues with personal bankruptcy code, and these pitfalls can cause problems with your case. If you commit severe mistakes, your bankruptcy could be dismissed. Make sure you are fully aware about personal bankruptcy before you make any final decisions. This can save you a lot of time and make the entire process easier.
Don’t take out big cash advances from any of your credit cards prior to filing for bankruptcy, taking advantage of the fact that those debts will later be erased. This will be viewed as fraud, and you may be held responsible for the balances despite your bankruptcy filing.
Before you file for personal bankruptcy, take great care in paying off your debts. Check the bankruptcy laws in your state to make sure you have not done anything in the past year to make yourself ineligible to petition for bankruptcy. Do not make a decision about filing until you are aware of all the current rules regarding bankruptcy.
While personal bankruptcy can always be an option, don’t do it before looking at other options. Be aware that some debt consolidation companies could cause you even more debt. Take what you’ve just learned to heart, and make wise financial decisions going forward.
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