Filing for bankruptcy must not be taken lightly. Read the suggestions below to learn what you should expect, and the steps you will need to take as you think through this decision. Educate yourself as much as possible prior to taking action.
Most people end up filing for personal bankruptcy because they owe more than they make. If you find yourself needing to file for bankruptcy it is important to familiarize yourself with the state laws. Bankruptcy rules vary by jurisdiction. In some states, your home is protected, while in others it is not. Before filing for personal bankruptcy, be certain that you are familiar with the laws.
If you are thinking about paying off your tax obligations with a credit card and then filing bankruptcy, think again. In most states, this debt won’t be discharged, and you could end up owing the IRS a whole lot more. If the tax can be discharged, so can the debt. So using your credit card to pay off your tax obligations, then filing for bankruptcy, can actually hurt you instead of help you.
Credit History
Before you proceed with your personal bankruptcy case, review your decisions to be certain that the choice you are making is the right. You have other options, including consumer credit counseling help. Since your credit history will forever note the bankruptcy, you want to make sure that you have tried everything else before you take an action such as this, in order to minimize the effect it will have with regard to your credit history.
When it soaks in that filing for personal bankruptcy, don’t use all of your retirement funds, or all of your savings to resolve insolvency or pay creditors. You should make every effort to leave your retirement accounts untouched until your retire. Using your savings is necessary, but decimating it and leaving yourself dangling with no future financial security is not a good idea.
If you are planning to file for bankruptcy, be sure to learn what types of assets you will be able to keep and which can be seized. The Bankruptcy Code provides a list of all the different kinds of assets that you can exclude. You need to read the exemptions for your state, so you know what property you can protect. You wouldn’t want to unexpectedly lose any possessions you treasure.
Don’t ever pay a bankruptcy attorney for a consultation, and ask a lot of questions. You can meet with a few lawyers before deciding on one. Most lawyers provide a free initial consultation. The lawyer who properly answers your questions is the one you should hire. Take your time choosing the right attorney to assist in your bankruptcy. So you have sufficient time to speak with a number of lawyers.
If you’re filing for bankruptcy soon, be sure you are going to hire a lawyer. Filing for bankruptcy is a complicated procedure, and you may not be aware of all the ins and outs. An attorney that specializes in personal bankruptcy, can help guide you and make sure that your filing happens properly.
Chapter 7
Remember to understand the differences between Chapter 7 bankruptcy and Chapter 13 bankruptcy. If Chapter 7 is what you file, your debts will get eliminated entirely. Your ties with all creditors will get dissolved. On the other hand, filing for bankruptcy under Chapter 13 means you will have 60 months to pay your debts back. You must know about the different bankruptcy types, and how each can affect you.
Chapter 13 bankruptcy might be a good option, so don’t overlook it. You are eligible for filing bankruptcy under Chapter 13 if you work and owe less than $250,000. This type of bankruptcy protects your assets from seizure and lets you repay your credits over the course of a few years. This lasts for three to five years and after this, your unsecured debt will be discharged. Missing a payment under these plans can result in total dismissal by the courts.
Keep in mind that filing for Chapter 7 bankruptcy may affect other people than just you, including family members, and in some cases, business associates. You can relieve yourself of any liability for debts that you may share with someone else through a Chapter 7 filing. This does not dissolve any co-signers of the debt, and your creditors will continue to try and collect from them.
Bankruptcy is not a something that simply happens, as this article has proven to you. Bankruptcy is complex and requires you to think carefully. The tips you have read here were designed to give you an advantage when filing. By using them, you can sure that you’re doing everything by the book and that you won’t be caught by surprise.
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