It’s never great when someone needs to file bankruptcy. Personal bankruptcy is a stressful and potentially embarrassing time for many people. Don’t give into it and be sure to use this advice to figure out what you need to know to avoid bankruptcy.
Before you file for bankruptcy, carefully consider if it is the right option for you. There are plenty of other options open to you, like consumer credit counseling. Your credit score will be forever effected by bankruptcy, which is why you should do everything else in your power to resolve matters first.
Be sure your home is well protected. Bankruptcy filings do not necessarily mean that you have to lose your house. You might be able to keep your home, contingent on certain factors, such as your home decreasing in value or having a second mortgage. It can be worthwhile to understand the homestead exemption law to see if you qualify to keep living in your home under the financial threshold requirements.
Put forth the effort to grasp the distinctions between Chapter 7 and Chapter 13 bankruptcies. By researching each type, you can begin to understand which method is right for you. Once you have done your own research, be sure to review your findings with your lawyer, who is the expert. This way, you can be sure of making a well informed choice.
Chapter 13
Consider Chapter 13 bankruptcy. You are probably eligible for Chapter 13 if your income is consistent and your unsecured debt is under $250,000. The benefit of this plan is that you retain personal belongings and private real estate and your debts are repaid by an organized payment 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.
If you decide to file for bankruptcy, it’s important that you’re educated about your rights. Collectors may try to convince you that your debt can’t be discharged. There are very few debts, such as child support or student loan debt, that can’t be bankrupted. If you know that a debt can definitely be bankrupted, yet the collector still harasses you, file a report with the attorney general in your state.
If you plan on filing bankruptcy, never wait too long. Some people just ignore the trouble they are in financially and think it will go away later. This is not a good decision. It doesn’t take long for debt to become unmanageable, and not taking care of it could eventually lead to wage garnishment or foreclosure. As soon as you’ve decided that you no longer have a handle on your debts, consult a bankruptcy lawyer to see if bankruptcy is right for you.
Whenever you file a petition for bankruptcy, do not leave out any information about your finances or assets. Neglecting to include the smallest of detail can lead to a petition being dismissed. No sum is too small to be included; err on the side of caution and include everything. Include all jobs, assets and loans.
Don’t take large cash advances from credit cards prior to filing since the debts will be eliminated from these cards. Doing so, is a type of fraud that may result in your having to pay back all money advanced from credit card accounts in the months just prior to your bankruptcy.
You should keep in mind that in the long run, bankruptcy can have a more positive impact on your credit score than continually missing payments towards your debt. While bankruptcy may appear in your credit report, you could surely try to fix your damaged credit. This is why people call bankruptcy a fresh start.
Personal Property
Filing a claim doesn’t always result in losing possessions. Personal property is exempt from bankruptcy claims. Personal property includes items like furniture, electronics, jewelry, and clothing. This will all depend on the type of bankruptcy you choose, your finances, and your state’s laws, but you could hold onto your large assets like the car and the family home.
Take the time to make a complete list of your debts. This will be included in your bankruptcy filing, so include every entity that you know you owe money to. Remember to go through all of your records and try to determine the exact amount. Avoid rushing through the bankruptcy paperwork; if you want each debt discharged, you need to make sure the numbers are right.
Most attorneys make a free service available to deal with creditors who are constantly calling about your debts. That way, you can simply give creditors this number, which allows them to call your lawyer and confirm that your bill is included in a bankruptcy filing. Once this is done, they will cease and desist calling you.
As you have learned, bankruptcy can be avoided. The advice you have read here will show you how you can escape the need to file for bankruptcy. If you begin using the tips you learned right away, you will surely see a big change in your life, and perhaps you will be able to save your credit history.
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