While filing for bankruptcy may be a hard decision to make, for some it is a necessity. It will be easier to go through the process if you have a good idea of what is involved. Keep reading for some solid wisdom from people who have themselves gone bankrupt.
Credit Card
Do not consider paying off tax debt with credit cards and filing for bankruptcy afterward. It won’t work. Credit card debt is handled charge by charge during bankruptcy, and in most states, tax debt cannot be discharged through bankruptcy. The rule here is that if you can get the tax discharged then you can get the debt discharged. So using your credit card to pay off your tax obligations, then filing for bankruptcy, can actually hurt you instead of help you.
Be sure you’re doing what’s right before you file for bankruptcy. You have better options. For example, you could try credit counseling. Bankruptcy is a serious negative on your credit history so make sure you have no other options before you file. It is important to keep your credit history as positive as possible.
Instead of relying on random selections from the phone book or Internet, ask around and get personal recommendations. Companies are constantly popping up, claiming to help, yet only seek to profit from your misery. In ensuring that your bankruptcy is as simple as possible, trusting your attorney makes a big difference.
Prior to filing for bankruptcy, determine which assets, if any, are exempt from being seized. The Bankruptcy Code lists assets considered exempt from being affected by bankruptcy. Many belongings may become eligible for repossession or seizure after filing for bankruptcy. If you don’t read it, you could have nasty surprises pop up later due to your prized possessions being seized.
When filing for bankruptcy it is crucial that you are candid and not concealing any liabilities or assets, as it will only show up in the future. The lawyer representing you when you file needs to have full knowledge of your financial situation. You are in this situation, now help them to give you the best assistance possible to deal with it. You do that by giving full disclosure and holding nothing back.
Since the majority of attorneys are willing to provide no-cost initial consultations, it is smart to meet with more than one before you make a selection. It is important to meet with the actual lawyer, because paralegals or assistants cannot give you legal advice. Comparing different lawyers makes it possible to find one with whom you work well.
Make sure you know how to differentiate between Chapter 13 and Chapter 7. Research both types of bankruptcy online, and weigh the positives and negatives each would offer you. Before making any decisions, discuss the information you have learned with your lawyer.
Chapter 13
Consider filing a Chapter 13 bankruptcy. If your total debt is under $250,000 and you have consistent income, Chapter 13 will be available to you. That kind of bankruptcy allows you to hold on to your personal things and real estate while repaying your debts with a plan to consolidate your debt. This lasts for three to five years and after this, your unsecured debt will be discharged. Consider that if you even miss one payment, your case will not be considered by the court.
Before you decide to file for Chapter 7 bankruptcy, you should consider what your bankruptcy might have on others, as your family and friends may be affected. Speak to an attorney or read the bankruptcy laws in your state to find out if certain loans can be excluded from your filing. But, creditors will ask for the money from your co-debtor.
Even if you are involved with Chapter 13 bankruptcy, it is still possible to get a mortgage or an automobile loan. There are extra hoops to jump through. You need to contact your trustee so you can get approved for a new loan. Document your budget to prove that you’re going to be able to make the payments. An explanation of need will also be necessary.
Know your rights when filing for bankruptcy. There are bill collectors who will claim that you cannot add your debts to your bankruptcy case. There are a few debts that cannot be cleared, such as student loans and child support, but be sure to know the details when dealing with debt collectors. If your creditors are telling you any other kind of debts cannot be cancelled, get a written proof and send it to the general office of your state’s attorney to report this illegal behavior.
Do not use the word “shame”, if you go bankrupt. Bankruptcy can sometimes leave people feeling guilty, ashamed and alone. Wallowing in these emotions benefits no one, and only serve to harm your own mental health. Try to keep a positive attitude during this tough time and you will be able to better cope with bankruptcy.
Facing bankruptcy is a negative situation that can bring on stress. Look for a good attorney who can help you through the process. Look beyond the fees a lawyer charges when you make your hiring decision. The cheapest attorney may not be the best, but the most expensive may not be the best either. Ask people who have used a bankruptcy lawyer for referrals, look them up at your local Better Business Bureau, then schedule free consultations in order to interview them. You could also sneak into court to watch a real live bankruptcy proceeding to see how that attorney handles the situation.
Bankruptcy laws are very exact and very important, so ensure that you’re well aware of all current laws before you file a petition. For example, it is against the law to transfer any assets from the filer to another for a year before filing. It’s also prohibted to run up debt on credit cards just prior to filing.
Nobody wants to file bankruptcy, but some people cannot avoid it. You should now have some excellent advice from people who have personally struggled with the bankruptcy process. Spending some time learning for others who have gone through the same thing reduce some of your stress.
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