We are in a difficult economic state these days. When there is a bad economy there are a lot of people losing their jobs and having problems with debt. Too much debt can lead to bankruptcy and all of its ill effects. If you would like to know how to get yourself or your friend out of filing for bankruptcy, read on for some possible answers.
Familiarize Yourself
Many people find that they must file for bankruptcy protection because they have more debt than they can afford to repay. If you have unmanageable debt, you need to familiarize yourself with regional bankruptcy laws. Most states differ in their laws governing bankruptcy. In certain states if you file for bankruptcy your home remains protected, but the laws vary depending on where you reside. Familiarize yourself with the bankruptcy laws of your state prior to filing.
If you are thinking about paying off your tax obligations with a credit card and then filing bankruptcy, think again. In most states, you will still owe money to the IRS and have to take care of the interest of your credit cards. In most cases, you can use the adage that “a dischargeable tax is a dischargeable debt.” If you live in an area where tax can be discharged through bankruptcy, financing your tax bill is pretty pointless.
When it gets time to think about bankruptcy, avoid using your retirement or savings to pay off the creditors or even make attempts to settle the debt. You shouldn’t dip into your IRA or 401(k) unless there is nothing else you can do. You may need to use some of your savings; however, you should not use all of your savings. Remember that you must safeguard your future financial security.
Unsecured Credit
After a bankruptcy, you may still see problems getting any kind of unsecured credit. If so, apply for a secured credit card. This will show other people that you’re serious when it comes to having your credit record in order. After some time passes they may be willing to offer you unsecured credit.
Do some research to find out which assets you could lose by filing for personal bankruptcy. There are some assets that cannot be seized through bankruptcy, and the law lists those assets. It is vital that you completely understand which assets are protected and which assets can be seized prior to filing bankruptcy. If you don’t read this list, there is a chance that you might get nasty surprises when they take your things away.
Think carefully about your different options before filing for bankruptcy. For example, if your debt is small, try a type of consumer counseling program. You may also find people will allow you to make lower payments. If that happens, get records of the debt modifications.
Be sure you have no other choice but to seek bankruptcy. Perhaps just consolidating some of your existing debt, could make them easier to manage. Filing a claim can take a long time and cause much stress. The future of your credit will be greatly affected. So, consider bankruptcy only as a last resort when you have no other choice.
Bankruptcy can be a good time to spend time with people you love. Filing for bankruptcy, and all that comes with it, can be hard to handle at times. It takes time and a lot of people feel stressed and ashamed throughout this procedure. It can be hard to face the world while the bankruptcy process is taking place. However, self imposed isolation will only make you feel even worse about the process and could even lead to depression. Because of this, you need to make sure you spend as much time as you can with your family and friends, even if you are ashamed of your finances.
If you filed for Chapter 13 bankruptcy, you can still get a mortgage or a car loan. However, it won’t be as easy as it may have been to get one prior to the bankruptcy. Normally, the trustee assigned to your bankruptcy must approve any new loan. Draft a personal budget to show that you will be able to repay your new loan. You will also need to explain why it is necessary for you to take out the loan.
The economy is showing signs of recovery, but unemployment and underemployment are still high. Even when your financial situation is not producing enough income, there are some things one can do in order to avoid bankruptcy. With any luck, you now see that options exist to help you steer clear of bankruptcy. Hopefully, you have the best luck.
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