Anyone who has had a personal possession, such as a car, repossessed by the IRS should consider bankruptcy. Bankruptcy can wreak havoc on credit, but it may be the only way out of your situation. The following article will provide some basic information about filing for bankruptcy and its possible consequences.
Once a person’s debts outstrip his or her ability to repay them, bankruptcy may be the only option left. If this applies to you, be sure that you know what the laws of your state are. Each state has its own set of rules regarding bankruptcy. In certain states if you file for bankruptcy your home remains protected, but the laws vary depending on where you reside. Be sure you educate yourself on local laws prior to filing.
Don’t use credit cards to pay your taxes if you’re going to file bankruptcy. In most states, this is not dischargeable debt. Therefore, you will end up owing the IRS a lot of money. Should the tax be dischargeable, the debt is often dischargeable as well. Therefore, you have no reason for use of a credit card, if the amount is to be discharged in due process of the bankruptcy.
Be sure you’re doing what’s right before you file for bankruptcy. Alternatives do exist, including consumer credit counseling. Bankruptcy is a permanent part of your credit, so before you make such a big decision, you might want to explore all other choices so that your credit history is affected as minimally as possible.
When looking for a lawyer to handle your bankruptcy claim, the best way to go is off of a personal recommendation instead of simply flipping through the phone book. Some companies just want to take advantage of you, so it is important that you have help from someone you trust.
Never pay to have a consultation with a lawyer, and ask a lot of questions. Most attorneys offer free initial consultations, and you should take advantage of the chance to interview multiple practitioners. Only choose an attorney once all your concerns are answered to your satisfaction. There is no need to offer an immediate hire, so take your time. This offers you the opportunity to speak with other attorneys.
Investigate any new laws before deciding to file a bankruptcy. The laws are constantly undergoing changes, so you must stay on top of them if you are going to file for personal bankruptcy correctly. To learn how the law has changed recently, go online and check your state’s website, or call the state government and ask them.
Chapter 7
Be certain to grasp the distinction between Chapter 7 and Chapter 13 bankruptcy cases. If you file using Chapter 7 bankruptcy, you will get all your debts eliminated. Any ties that you have with creditors will be dissolved. Chapter 13, on the other hand, involves a five year payment period before any remaining debts are cancelled. It’s crucial that you know the differences between all of the various kinds of bankruptcies so that you may choose the best option for your situation.
Do not forget to enjoy life a little once you get through the initial filing process. Many people feel a lot of stress while they work through the bankruptcy process. This stress may lead to something worse like depression, so do what you can to fight that from happening. Once your petition is in the hands of the judge, all you can do is wait.
If you filed for Chapter 13 bankruptcy, you can still get a mortgage or a car loan. There will, however, be obstacles. You have to meet with your trustee to get approval for the new loan. When meeting with the trustee, bring a budget which shows that you will be able to afford the payment on the loan you are trying to get. It will also be necessary to show why a new purchase needs to be made.
When you file for bankruptcy, you should be very aware of your rights. Many creditors or bill collectors might tell you your debts cannot be included in a bankruptcy. However, there are few debts that cannot be eliminated, like student loans and child support payments. If a collector tells you your debt won’t be discharged in your bankruptcy and you know that it will, report the collector to the attorney general’s office in your state.
The first step to making your bankruptcy successful is to turn over a new leaf and decide to manage money better. Avoid incurring new obligations or allowing existing debt to grow in advance of your bankruptcy. Judges and bankruptcy trustees take your repayment history into account when deciding the terms of your bankruptcy. Your most recent behavior should show that you realize the error of your ways and have changed course to become more fiscally responsible.
Once a few months have passed after your bankruptcy, contact the three major credit reporting agencies and request copies of your report. Remember that this report would be representing your closed credit accounts and your discharged debts. Resolve any problems immediately so you can build up your credit score as quickly as possible.
This article has made it known that bankruptcy is something you may be able to turn to. Nonetheless, you should remember the negative impact filing for bankruptcy will have on your credit rating. For this reason, filing for personal bankruptcy should be your last resort. Arming yourself with knowledge is a good way to protect assets and approach the process wisely.
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