You’ve heard it before and you’ll hear it again–the economy is in rough shape. With a recession comes an inevitable increase in unemployment and personal debt levels. Debts usually end in bankruptcy which isn’t good. If you’re in danger of going through bankruptcy, then the below article can help you in getting out of it.
Do not use a credit card to pay income taxes and then file for bankruptcy. Credit card debt is handled charge by charge during bankruptcy, and in most states, tax debt cannot be discharged through bankruptcy. The rule here is that if you can get the tax discharged then you can get the debt discharged. Because of this, transferring the debt to your credit card is pointless.
If you are faced with the choice of filing for bankruptcy or using your emergency fund or retirement accounts to pay creditors, opt to file for bankruptcy. Avoid ever touching retirement funds until you have no other choice. You may have withdraw from your savings every now and then, but try to leave yourself some financial security for the future.
A key tip for those filing a personal bankruptcy petition is to always be completely honest in all documentation. To avoid problems, penalties and future re-filing bans, resist the urge to hide documentation or assets.
Don’t be afraid to remind your attorney of certain details in your case. It is wrong to assume that your lawyer will remember every word you ever utter! Don’t be afraid to speak up, as it is your case and your future will be affected by its outcome.
You must be absolutely honest when filing for personal bankruptcy. If you try to hide any of your information, it will eventually surface and cause you problems. Your bankruptcy lawyer has to know every detail of your finances, whether bad or good. Telling the truth will allow you reach a solution that is feasible, given your current situation.
If you are considering filing for bankruptcy you definitely need to hire an attorney. Having a lawyer on your side is the best way to avoid mistakes and bad decisions. A personal bankruptcy attorney can help and guide you along through the bankruptcy process.
Familiarize yourself with any new law before you make the final step to filing for bankruptcy. These laws change regularly and you should stay up-to-date so you can make the best decisions. To know what these changes are, go to your state’s website or contact the legislative offices.
60 Month Period
There are two types of personal bankruptcy: Chapter 7 and Chapter 13. Make sure you know what each entails so you can make the right choice. If you file for Chapter 7 bankruptcy, all of your debts will be eliminated. With very few exceptions, the connections between you and your creditors will be severed. With a chapter 13 bankruptcy, a 60 month period of time will be established in which you will repay the as much of your debt as possible. Following the 60 month period of time, the remainder of your debt will be excused. It’s crucial that you know the differences between all of the various kinds of bankruptcies so that you may choose the best option for your situation.
Make sure your home is safe. Bankruptcy filings do not necessarily mean that you have to lose your house. If your home has significantly depreciated in value or you’ve taken a second mortgage, it may be possible to retain possession of your home. You should also examine the possibility of taking a homestead exemption. This could apply if your income falls below the financial threshold.
The economy is showing signs of recovery, but unemployment and underemployment are still high. You can avoid bankruptcy even with no steady source of income. Hopefully this article has provided you with some tips to keep yourself, or someone else, from having to file for bankruptcy. We wish you well.
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