Embarking on a personal bankruptcy filing can be quite complicated. There are a number of kinds of bankruptcy. The type that applies to you will be chosen based upon the type of debts you have. The most important step you can take, of course, is to learn what you can about the process before ultimately deciding one way or the other. The tips included in this article should give you some direction as you go through the process of deciding to file and filing for personal bankruptcy.
Credit Cards
Don’t pay tax requirements with your credit cards with the thought of starting the bankruptcy process afterward, without doing your research first. In most states, this is not dischargeable debt. Therefore, you will end up owing the IRS a lot of money. If the tax can be discharged, so can the debt. So, in short, do not use your credit cards to pay off debts right before you file for bankruptcy.
Instead of getting your lawyer from the yellow pages or on the Internet, try your hardest to find one with a personal recommendation. There are various companies that prey on the financially desperate, so you need to find someone you can trust to ensure the process goes smoothly,
Familiarize yourself with the bankruptcy code before you file. Bankruptcy law has changed substantially in recent years, and therefore you must understand how such changes may affect your situation. All of these changes will be addressed on the state’s legislative site. You can also contact them directly by phone or office visit.
Be certain to grasp the distinction between Chapter 7 and Chapter 13 bankruptcy cases. Chapter 7 bankruptcy completely wipes out your debt. Any ties that you have with creditors will be dissolved. A Chapter 13 filing involves a repayment plan, though. Typically, you will make a partial payment against your debts over the next 60 months before the balance of the debts is lifted. Take the time to learn more about these different options so you can make the best decision possible.
Investigate your other alternatives before you decide you have to go with bankruptcy. You may well be able to regain control over your debts by consolidating them. Filling for bankruptcy is a lengthy, stressful process. You should be aware that there are some negative ramifications to it, like extreme damage to your credit score. You only want to file for bankruptcy after you have exhausted your other options for dealing with your debts.
Don’t automatically assume that bankruptcy is your only option. There are many other options including debt consolidation and making payment plans with your creditors. Various loan plans out there can be a lifesaver if you’re facing a foreclosure. These plans allow you a longer pay off period by extending the term of the loan, reducing the rate of interest or forgiving late fees. When all is said and done, the creditors want their money, so sometimes it’s best to deal with a repayment plan than with a bankruptcy debtor.
If you filed for Chapter 13 bankruptcy, you can still get a mortgage or a car loan. This is harder. You will be required to meet a trustee and be approved for a new loan. It is important to make a budget and prove that you are able to afford the payment. The odds are also good that you will be asked exactly why you’re purchasing a new item. Make sure you have a good reason.
Be aware of the fact that you may be under a great of stress while you deal with your bankruptcy. To help yourself deal with this stressful situation, make sure you hire a legitimate attorney. Don’t allow cost to determine who you hire. The most expensive attorneys are not necessarily the best ones. You can get good information about attorneys from friends,the internet and free consultations that most attorneys provide. It is even possible to watch a court hearing in order to see how well an attorney handles a case.
Bankruptcy is not a decision to be taken lightly. If you feel that it is best for you to file for bankruptcy, a qualified attorney can be of great assistance, ensuring you make the best choices.
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