If you are thinking about filing for bankruptcy, research all your options before making an informed decision. By reading this article, you will have a better understanding of all that filing for bankruptcy entails. Find out all the information you can before filing for bankruptcy.
Credit Cards
Don’t use credit cards to pay your taxes if you’re going to file bankruptcy. Most of the time, you cannot discharge this debt. As a result, you will owe the IRS a lot of money. Generally speaking if you can discharge the tax, you can discharge the debt. It is pointless to use credit cards if they can be discharged.
Prior to filing for bankruptcy, be sure you have investigated all of your alternatives. You have other options, including consumer credit counseling help. Before you take the drastic move of filling for bankruptcy and living with a long lasting bad credit history, make sure to consider using another way that may not be as damaging to your credit.
When it appears likely that you will file a petition, do not start spending your last remaining funds on debt repayment. You shouldn’t dip into your IRA or 401(k) unless there is nothing else you can do. If you do have to dig into your savings, make sure that you leave enough to sustain you and your family for a couple of months.
A key tip for those filing a personal bankruptcy petition is to always be completely honest in all documentation. It is vital that you disclose all information about your assets and income so there are no delays or penalties, such as a court barring you from filing again later in the future.
Bankruptcy Laws
Learn the newest bankruptcy laws before filing. Bankruptcy laws change a lot and before making the decision to file, you need to know what you are getting yourself into. Your state’s legislative offices or website will have up-to-date information about these changes.
It is important to know how Chapter 7 filings differ from Chapter 13 filings. Take time to research this online and see the pros and cons for filing each one. Ask your bankruptcy lawyer to clarify anything you don’t understand before making a final decision about which type of bankruptcy to file.
Always make your loved ones a priority. Filing for bankruptcy is a difficult process. It is long, full of stress and leaves individuals having feelings of shame and guilt. Some people do not even want to speak with others until the bankruptcy is official. This is not recommended because you will only feel bad and this may cause you to feel depressed. Make it a point to catch yourself if you feel yourself pulling away from others. Tell others that you would like to do some enjoyable things together while you go through bankruptcy process, then do it.
Think about all the choices available to you when you file 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. A plan that can be useful when foreclosure is looming is a loan modification. The lender can help your financial situation by getting interest rates lowered, dropping late charges, and in some cases will allow you to pay the loan over a longer period of time. Because of the fact that creditors would like to see their money they are likely to offer repayment plans versus not getting paid at all if you file for bankruptcy.
Chapter 7 Bankruptcy
Before you choose Chapter 7 bankruptcy, think about what effect that is going to have on any co-signers you have, which are usually close relatives and friends. Debts that involved a co-signer can be discharged in Chapter 7 bankruptcy. However, the creditors could come after your co-signer and demand full payment for the debt.
You can take out a mortgage or car loan while filing Chapter 13 bankruptcy. It’s a bit more difficult, though. Before you can take out a new loan, you will have to clear it with your trustee. When you meet with your trustee or financial adviser, make sure that you come up with a sound budget proposal. You will also need to have a good reason why you need the item.
Before filing for bankruptcy, learn your rights. There are unscrupulous debt collectors who may suggest that your obligations cannot be included in a bankruptcy. Few debts exist that are not covered by bankruptcy, such as student loans or child support. If you are unsure about specific types of debt, check the bankruptcy laws in your state or consult an attorney.
Do not wait until things go from bad to worse before filing 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. Yet you can have debtors come after you and potentially take your home if you are not handling your debts properly. Speak with a bankruptcy lawyer as soon as you become aware that you cannot handle your debts.
Before filing for bankruptcy, you must be educated on the specifics of all bankruptcy laws. You need to know certain things, like the fact that it’s illegal to transfer any asserts 12 months before filing your claim. It is also illegal for someone who files for bankruptcy to drastically increase their debts on credit cards immediately before filing.
As this article has demonstrated, you do not have to go through bankruptcy. Several steps must be completed, and completed accurately. When you implement the suggestions in this article, you can feel confident that you have covered all the bases with regard to bankruptcy filing.
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