It is an unfortunate fact that the topic of bankruptcy is quite common nowadays. You can thank the dismal economy for that. Before filing for personal bankruptcy, take some time to understand the entire process and applicable laws so that you can make wise decisions. This article is going to give you that knowledge.
Be warned that after your bankruptcy, you may stand out as a leper to credit institutions. You may be unable to get a simple credit card. A great way to rebuild your credit is to apply for a prepaid credit card. They offer you the chance to demonstrate the seriousness with which you now take your financial obligations. In time, you might be granted unsecured credit again.
Look for a bankruptcy lawyer that comes from a personal recommendation instead of someone random on the Internet or in the 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.
Before pulling the trigger on bankruptcy, be sure that other solutions aren’t more appropriate for your case. For example, consumer credit counseling services can often help you figure out a workable repayment plan with creditors. You may have the ability to negotiate much lower payments, just be sure any debt modifications you agree to are written and that you have a copy.
Chapter 7
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. In Chapter 7 bankruptcy, your debts are all eliminated. 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 need to determine which type of bankruptcy is right for you given your unique financial situation.
Consider Chapter 13 bankruptcy. If your source of income is regular and your unsecured debt is less than a quarter million, Chapter 13 bankruptcy is something you are able to file for. That kind of bankruptcy allows you to hold on to your personal things and real estate while repaying your debts with a plan to consolidate your debt. This repayment period usually lasts from three to five years. If you make your payments faithfully during that time, any remaining unsecured debt will be eliminated. Missing a payment under these plans can result in total dismissal by the courts.
Be around family as much as possible. Going through a bankruptcy is never easy. At the end of the process, many people are left with feelings of shame and worthlessness. There are a number of people who wish to go into seclusion while undergoing the process of personal bankruptcy. Isolating yourself from your loved ones can lead to feelings of depression. Time spent with people who care about you can give you new perspective on your financial situation.
Do not use the word “shame”, if you go bankrupt. Filing for bankruptcy leads people to feel all sorts of emotions like shame, guilt and feeling irresponsible. Try not to give in to these feelings, as they are of no help to you and they can affect your emotional health. To best deal with filing for bankruptcy, look for the positives in the situation.
Do not wait until things go from bad to worse before filing bankruptcy. Do not avoid your creditors; they will not go away. It is important to decide on a course of action as soon as you begin experiencing financial problems. It is very common for personal debts to snowball suddenly. When this happens, terrible consequences, such as wage garnishment and foreclosure result. You should call a good bankruptcy lawyer and ask for advice as soon as you find your debts have become completely unmanageable.
As you must realize by now, bankruptcy is the topic of many dinner conversations lately because of the economy. By following the advice presented here, you can make sound decisions in regards to your relationship with personal bankruptcy.
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