Sadly, bankruptcy is an increasingly widespread phenomenon of late. The recent downturn in the economy has only exacerbated the situation. Just because it’s more commonplace doesn’t make it simpler, however. So before you decide to file a claim to get out of debt, you first need to ensure that you understand the implications of the entire process. This article is going to give you that knowledge.
When people owe more than what can pay, they have the option of filing for bankruptcy. If you are in this position, you need to be familiar with the laws in your area. Each state has its own set of rules regarding bankruptcy. For instance, in some states, you can’t lose your home to bankruptcy, while in other states, you can. See to it that you understand the bankruptcy laws in the area that you live prior to filing.
Knowledge is power when you’re considering bankrupcy; there are many websites available to help you. Many sites, including the U.S. DOJ, the NACBA, and the ABI all have useful information. The more you know about it, the better you are able to make the best decision for your situation and to make sure that the bankruptcy proceedings move forward with minimal setbacks.
Do not use your retirement fund or savings to pay off creditors. You shouldn’t dip into your IRA or 401(k) unless there is nothing else you can do. You may need to tap your savings, but don’t empty your savings account, as this could leave you in a difficult situation down the road.
See if there is an alternative you can use before declaring bankruptcy. For example, consumer credit counseling services can often help you figure out a workable repayment plan with creditors. You could even negotiate for lower payments. However, you should ensure that you always obtain a written record of all the changes to your debt that you’ve agreed to.
Always protect your house. Bankruptcy doesn’t always mean you’ll lose your home. You can still keep your home, it just depends on your specific situation and the value of your home. Otherwise, there is a homestead exemption you should look into, as it might let you stay in your house.
Learn and gain a firm grasp of the differences in applying for Chapter 7 bankruptcies versus Chapter 13 bankruptcies. Go to a reputable website and research the benefits and detriments of each type of bankruptcy. Before making any decisions, discuss the information you have learned with your lawyer.
Chapter 13
Consider filing for Chapter 13 bankruptcy. If you have less than a quarter of a million dollars in debt that is unsecured and a regular income, you are eligible to file a Chapter 13. That way, you can hold onto your personal assets and pay back a portion of your debts pursuant to an approved plan. This plan usually lasts from 3 to 5 years, after which, you will be discharged from all unsecured debt. Consider that if you even miss one payment, your case will not be considered by the court.
Make sure you consider implications of bankruptcy before filing for Chapter 7. When filing Chapter 7, you are not legally responsible for the debts in your name. This does not dissolve any co-signers of the debt, and your creditors will continue to try and collect from them.
Don’t file for bankruptcy without knowing your rights. Bill collectors will lie to you and say you can’t have their bill discharged. There are very few debts, such as child support or student loan debt, that can’t be bankrupted. If you are told by a debt collector that your debts are not dischargeable, make a record of your conversation and report the individual to the proper state authorities.
Make sure that you disclose every bit of financial information on your bankruptcy petition. Overlooking any information can result in a delayed or rejected petition. Even if it looks insignificant, you must add it to your documents. When it comes to the types of things you might not be thinking about adding, just think about any automobiles you have, any money under the table you’re making, etc.
As this article stated, the subject of bankruptcy is on many people’s minds nowadays, due to the economy. By following the advice presented here, you can make sound decisions in regards to your relationship with personal bankruptcy.
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