Before you file for bankruptcy, make sure you have considered all your options. Not only are there a host of unpleasant things that will take place, it is often shameful to tell people about your monetary situation. Using the tips in this article, you can learn how to avoid bankruptcy and get your finances on the right track.
A lot of people find themselves needing to file bankruptcy when they are unable to pay their bills. If you’re in this position, it is a good thing to familiarize yourself with the laws that apply in your area. Each state has their own bankruptcy laws. In some states, your home is protected, while in others it is not. Do not file before learning about the bankruptcy laws in your state.
Don’t use a credit card to pay off your taxes before filing for bankruptcy. In some places the debt can not be discharged, and you may still need to pay the IRS afterward. Remember that if you can discharge the tax you can discharge the debt. So, in short, do not use your credit cards to pay off debts right before you file for bankruptcy.
Always be honest and forthright when it comes to your bankruptcy petition. Do not hide any income or assets or go on a spending spree before filing for bankruptcy: the court will find out and will not have a positive opinion of you.
Instead of relying on random selections from the phone book or Internet, ask around and get personal recommendations. There are plenty of companies who know how to take advantage of people who seem desperate, and it’s important to be sure your bankruptcy can go smoothly; take your time and choose someone you can trust.
Hire a lawyer if you plan on filing for bankruptcy. It is unlikely that you will be able to comprehend all the various rules and regulations involved in bankruptcy law. Choose an attorney versed in personal bankruptcy to make sure you don’t make mistakes.
Your most important concern is to protect your home. Bankruptcy filings don’t necessarily have to end in the loss of your home. It may be possible to keep your home if the value has depreciated, or there is a second mortgage. There are also homestead exemptions which, depending on your other finances, may allow to remain in your home.
Chapter 13
Find out more about Chapter 13. If you posses a regular source when it comes to income, and you have less than $250,000 of unsecured debt, you could file using Chapter 13 bankruptcy. This type of bankruptcy protects your assets from seizure and lets you repay your credits over the course of a few years. Expect to make payments for up to 5 years before your unsecured debts are discharged. Just ensure that you take necessary precautions, as missing one payment can result in the court dismissing your case.
If you are making more money than you owe, bankruptcy should not even be an option. While filing may seem simple and a way to get out of paying your debts, it does tremendous amounts of long-term harm to your credit report.
It is possible to get an auto loan or mortgage during the repayment period for Chapter 13 bankruptcy. However, there are steps which must be taken to ensure you are within the law of bankruptcy. You will have to see your trustee and the approval for this new loan. In order to show that you’re capable of paying off your new loan, prepare a budget that includes its payments. You also have to prepare yourself to explain the reasons you need to buy the item.
Debt Collectors
Know your bankruptcy rights. Occasionally, debt collectors will attempt to convince you that your debt isn’t eligible for bankruptcy. There are very few debts, such as child support or student loan debt, that can’t be bankrupted. If any debt collectors tell you that their debts can’t be bankrupted, make a report with your state attorney general.
Find the right time to take action. Timing is very important when it comes to personal bankruptcy filings. Sometimes, it is good to file immediately, but sometimes it is smarter to wait until you have passed through the worst of things. Discuss the strategic timing of your bankruptcy with your attorney.
If you know that you are about to file for bankruptcy, don’t exploit the information asymmetry and get huge cash advances on your credit cards. This could be considered as fraud, and you may even be forced in paying all of it back to credit card companies.
Pay attention to how you satisfy any personal debts before filing for bankruptcy. The laws regarding bankruptcy most often prevent you from paying back some creditors for up to 90 days before filing, and friends and family for up to one year. Do your research and figure out the laws for you.
Clearly, bankruptcy does not need to be inevitable. The guidance from this piece can serve as a road map for steering clear of bankruptcy. Learn to live within your means and bankruptcy may be avoided.
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