It can be a complicated process to file for personal bankruptcy. Bankruptcies come in different types; what you choose is subject to your financial situation and the kind of debts that you have. Learn as much as you can about the topic before you make any decisions regarding filing. In the following paragraphs, you’ll find some tips that will get you off to a good start.
Don’t use credit cards to pay your taxes if you’re going to file bankruptcy. The fact is that the credit card debt will be ineligible for discharge, and your tax debt may increase. A common rule is that dischargeable tax means dischargeable debt. There isn’t any reason to use a credit card to pay the tax bill since the bill can be discharged anyway.
Instead of relying on random selections from the phone book or Internet, ask around and get personal recommendations. Don’t allow yourself to be taken advantage of by predatory lawyers just because you are filing for bankruptcy. It is important to find someone trustworthy.
Be persistent in researching information about filing for bankruptcy and consult a qualified personal bankruptcy attorney. Certain property cannot be repossessed while you are in the process of filing for bankruptcy so be sure to learn about the laws in your state. There is a chance that you can get back your property if it has been less than ninety days since repossession. Speak to a lawyer who will be able to help you file the necessary paperwork.
Don’t pay for the consultation with a lawyer who practices bankruptcy law; ask a lot of questions. Seek free consultations from a handful of lawyers, before deciding which one to hire. Do not make any final decisions until every question you have has been answered. It’s isn’t necessary to make a choice right away. This offers you the opportunity to speak with other attorneys.
Chapter 7
Know the differences between Chapter 7 and Chapter 13 bankruptcy. Chapter 7 bankruptcy is intended to wipe out all outstanding debts. With very few exceptions, the connections between you and your creditors will be severed. If you file for Chapter 13 bankruptcy, however, you will enter into a 60 month repayment plan before your debts are completely dissolved. You need to determine which type of bankruptcy is right for you given your unique financial situation.
Consider Chapter 13 bankruptcy. You are probably eligible for Chapter 13 if your income is consistent and your unsecured debt is under $250,000. This allows you to keep possession of your real estate and property and repay your debt through a debt plan. Typically, any plan you develop will last around 3-5 years. Afterwards, any remaining unsecured debts will be discharged. Just know that missing one payment could cause your case to be dismissed.
Do not forget to make quality time for friends and family members. Filing for bankruptcy is a difficult process. The long process can leave people stressed out and racked with guilt and shame over having their financial affairs laid out for everyone to see. Some people do not even want to speak with others until the bankruptcy is official. Isolating yourself from your loved ones can lead to feelings of depression. This is the reason that you need to take the time out to spend time with everyone you love despite what your financial situation is.
Don’t forget to enjoy your life once your finances get fixed. It’s not uncommon to be overwhelmed by the filing process. That stress can cause depression, if you don’t take care to avoid it. Life will get better; you just need to make it through the bankruptcy process.
Before petitioning, you need to know what the personal bankruptcy rules are first. The bankruptcy laws are complex, and things could go badly if even one thing is out of place. If you do not know bankruptcy law, your bankruptcy case could be dismissed. Before you begin bankruptcy proceedings, research as much as you can. The proceedings will be much smoother with this information.
Credit Counseling
Consider other options prior to filing for personal bankruptcy. Credit counseling may work for you. You can get the help you need from a variety of non-profit credit counseling companies. They will make arrangements with your creditors so you will have lower payments as well as lower interest rates. Payments are then made to the creditor via the counseling service.
Filing for bankruptcy may damage your credit less than missing debt payments. Though it will still mar your credit history for up to 10 years, the damage can be improved. One of the best benefits to bankruptcy is the promise of a fresh start.
Typically, people who have faced bankruptcy swear off credit cards. Although this may seem plausible, this actually isn’t doing them any good. Credit cards are necessary for proving that you have gained financial stability and for garnering mortgage and auto loan approvals. To start, use one credit card sparingly and pay it off in full each month.
As you can see, filing for bankruptcy is a serious decision that must be considered carefully before you make it. If you feel that it is your best option for your current financial state, you should contact an experienced bankruptcy lawyer who can advise you in this turning point in your life.
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