Filing for bankruptcy can relieve you of one kind of financial stress, but it provides you with new stresses, too. On one hand, people will be scrutinizing your private financial affairs. Then again, after your debts have been discharged, you can begin rebuilding finances and stopping those calls from bill collectors. Keep reading for a few smart suggestions for making bankruptcy a smoother process.
A lot of people find themselves needing to file bankruptcy when they are unable to pay their bills. If this sounds like you, start familiarizing yourself with your state laws. When it comes to bankruptcy, states have varying laws. In some areas, your residence may be completely exempt, but in others, it will not be. See to it that you understand the bankruptcy laws in the area that you live prior to filing.
Don’t use a credit card to pay off your taxes before filing for bankruptcy. In some places the debt can not be discharged, and you may still need to pay the IRS afterward. If the tax has the ability to be eliminated, the debt can be too. So, in short, do not use your credit cards to pay off debts right before you file for bankruptcy.
Credit History
Make sure you’ve exhausted all other options prior to declaring bankruptcy. Alternatives do exist, including consumer credit counseling. Bankruptcy can leave your credit history permanently marked. Prior to doing this you need to be sure you try everything else first to get your credit history into shape and to lessen the impact.
Before picking a bankruptcy lawyer, speak with more than one, since most offer a consultation for free. It is important to meet with the actual attorney, not the attorney’s assistant or paralegal; those people are not permitted to give legal advice Take some time to talk to different lawyers to find one that fits your needs, and meshes well with you.
Your most important concern is to protect your home. Filing for bankruptcy does not mean you have to lose your home. You could keep your home; it depends on your home’s value or if a second mortgage is on your home. If you meet certain criteria, you may be able to retain ownership of your home even after filing for bankruptcy.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy might be a good option, so don’t overlook it. In most states, Chapter 13 bankruptcy law stipulates that you must have under $250,000 of unsecured debt and a steady income. This will allow you to keep your personal property and real estate and repay your debts via a debt consolidation plan. The plan is usually for a term of three to five years, and a discharge will be granted at the end of that term. Remember that if you even miss one payment that’s due under this plan, the court could dismiss the whole case.
It is still possible to get a mortgage or car loan, even if you are filing for Chapter 13 bankruptcy. It is more difficult. You will need to secure the trustee’s approval for any new debt obligation. Create a budget and prove that you will be able to afford it. Also, be sure you can provide an explanation as to why this purchase is necessary.
It is important to understand your rights when you file for bankruptcy. Don’t take a debt collectors word for it simply because they tell you that you can’t have many or all of your debts erased by bankruptcy. There are not many debts that can not be bankrupted, student loans and child support for example. If a bill collector attempts to say their bill cannot be discharged, look it up. If they are wrong, report them.
When it comes to filing for bankruptcy, there are both positives and negatives. No matter why you have decided to file, remember that knowledge is power when it comes to managing the situation. Apply the tips from this article to help make your bankruptcy an easier process. Use these tips during the process and feel a little better about it.
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