Helpful Advice For Those Facing Personal Bankruptcy

Is your financial situation bad and you think the only solution is bankruptcy? You’re not alone, so don’t fret. Many people, globally, have had to resort to bankruptcy for their financial hardships. This article will give you helpful tips to make sure your bankruptcy goes smoothly.

Credit Cards

If you are considering using credit cards to pay your taxes and then file for bankruptcy, you may want to rethink that. Credit card debt is handled charge by charge during bankruptcy, and in most states, tax debt cannot be discharged through bankruptcy. Rule of thumb is if the tax is dischargeable, then the debt will be dischargeable. So, in short, do not use your credit cards to pay off debts right before you file for bankruptcy.

Instead of relying on random selections from the phone book or Internet, ask around and get personal recommendations. There are a number of companies who may take advantage of your situation, so always work with someone that is trustworthy.

Brush up on the latest bankruptcy regulations before you decide whether or not to file. Bankruptcy law has changed substantially in recent years, and therefore you must understand how such changes may affect your situation. To learn about the changes, you should check out the website of your state’s legislation or you can call their office.

Prior to declaring bankruptcy you really need to be sure that you’ve exhausted all your other options first. For example, consumer credit counseling programs can help if your debt isn’t too large. You can also talk to creditors and ask them to lower payments, but be sure to get any debt agreements in writing.

Many bankruptcy attorneys offer the first consultation with no charge, so consult with several before deciding on one. Just be sure that the person you speak with really is the lawyer, rather than a paralegal, since they cannot legally give advice. Take some time to talk to different lawyers to find one that fits your needs, and meshes well with you.

Unsecured Debt

Consider Chapter 13 bankruptcy, if you chose to file. 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. 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 normally lasts from three to five years, in which you’ll be discharged from unsecured debt. Stay mindful that should you for any reason miss even one plan payment, your whole case is going to get thrown out by the court system.

Filing for bankruptcy is not the best choice if your monthly income is enough to cover your bills. Bankruptcy may seem to be the easy way out, but your credit report will show the scar for the next ten years.

Before declaring bankruptcy, see if there’s anything less drastic you can do to repair your credit. Consult with a bankruptcy attorney to see if an interest rate reduction or debt repayment plan is an alternative to filing for bankruptcy. Loan modification plans on home loans are a great example of this. There are many ways in which a lender can make adjustments that will be helpful to you. Among them are extending the loan, forgiving late charges and reducing the interest rate. When all is said and done the creditors just want their money, and more often than not will work with you on a repayment plan.

Know your bankruptcy rights. Some debtors will try to tell you your debt with them can not be bankrupted. Only a few debts, including child support and tax liens, are ineligible for bankruptcy. If a bill collector attempts to say their bill cannot be discharged, look it up. If they are wrong, report them.

As stated earlier, many people like you have found the need to file for bankruptcy. However, thanks to the piece above, you are better prepared to face the challenges that may come your way. The tips provided above should help you get through bankruptcy.