Filing for bankruptcy is not a pleasant experience. If you are contemplating filing for bankruptcy, it means that you are in a dire financial situation. Don’t give into it and be sure to use this advice to figure out what you need to know to avoid bankruptcy.
Do not use a credit card to pay income taxes and then file for bankruptcy. In most states, you will still owe money to the IRS and have to take care of the interest of your credit cards. The main thing to remember is that dischargeable taxes are the equivalent of dischargeable debts. If you live in an area where tax can be discharged through bankruptcy, financing your tax bill is pretty pointless.
Don’t be reluctant to remind your lawyer about specific details he may not remember. Don’t assume that they’ll remember something important later without having a reminder. Do not hesitate to speak up; this is your hearing and your future is on the line.
Unsecured Credit
After filing for bankruptcy, you could have trouble acquiring unsecured credit. A great way to rebuild your credit is to apply for a prepaid credit card. This will show other people that you’re serious when it comes to having your credit record in order. After a while, you may be able to get unsecured credit again.
Try to get a bankruptcy lawyer that your friends recommend, as opposed to someone that you find from the Internet or yellow pages. Bankruptcy attracts a lot of fly-by-night firms that take advantage of desperate people, and a word-of-mouth recommendation makes it more likely that your bankruptcy will go smoothly.
Be honest when filing for bankruptcy, because hiding liabilities or assets can only cause trouble to you. Whomever you use to file with must know everything there is to know about your finances, both good and bad. Don’t withhold information, and create a smart way of coping with the reality of the situation.
Make sure that you understand the difference between Chapter 13 bankruptcy and Chapter 7 bankruptcy. Chapter 7 bankruptcy completely wipes out your debt. This includes creditors and your relationship with them will become no longer existent. Chapter 13, on the other hand, involves a five year payment period before any remaining debts are cancelled. You have to know what differs between all of the kind of bankruptcy, so you know which is one is ideal for you.
A free consultation is standard for bankruptcy attorneys, so shop around before settling on one. Meet with the actual lawyer, not a paralegal or assistant, as they’re not allowed to give out legal advice. Look for an attorney until you find one you feel comfortable with.
It is possible to keep your home. Filing for bankruptcy doesn’t automatically involve losing your home. You might be able to keep your home, for instance, if you have two mortgages or if your home has lost its value. If you meet certain criteria, you may be able to retain ownership of your home even after filing for bankruptcy.
Chapter 13
Chapter 13 bankruptcy might be a good option, so don’t overlook it. 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. Remember that if you even miss one payment that’s due under this plan, the court could dismiss the whole case.
You do not always need to give in and file bankruptcy. By using this article you will be well on your way to avoiding bankruptcy. Start using the information you learned from this article and make changes so you may not have to ruin your credit history.
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