When you’re indebted to people or institutions, it’s only a matter of time before they show up at your door to collect. Sometimes literally. Put your finances in order and file for bankruptcy if this is your only option to get out of debt. Continue reading for some useful tips to help guide you through this potentially stressful process.
Many people find that they must file for bankruptcy protection because they have more debt than they can afford to repay. If this sounds familiar, you should read up on the bankruptcy laws in your state. Every state is different when it comes to dealing with bankruptcy. In some areas, your residence may be completely exempt, but in others, it will not be. It is important to understand the laws in your state before filing for bankruptcy.
Retirement Accounts
As bankruptcy appears on the horizon, don’t take your savings or retirement accounts to try to pay off all your bills. Retirement accounts should never be touched if it can be helped. Using your savings is necessary, but decimating it and leaving yourself dangling with no future financial security is not a good idea.
Be brutally honest when you file for bankruptcy, as hiding assets or liabilities, will only come back to haunt you. All of your financial information, be it positive or negative, must be disclosed to those in charge of filing your case. They need to know it all. Being honest is both the right thing to do and, moreover, it is required by law.
Weigh all of your options before declaring bankruptcy. For example, consumer credit counseling programs can help if your debt isn’t too large. It may also be possible to get lower payments, but if you do, be sure to obtain records for any consensual debt modifications.
Spend time with loved ones. Going through bankruptcy is difficult. Having to declare bankruptcy leaves many people feeling like a failure. Many people tend to hide until their process is completed. This isn’t true though because when you isolate yourself you will just start to feel worse and may become depressed. It’s crucial to spend time with loved ones despite your present financial situation.
Avoid filing for bankruptcy if you make more money than your monthly bills. The cost to your credit history far outweighs the simplicity of the easy-out bankruptcy. This is a hard pill to swallow for many.
There are circumstances where you are able to keep your car during a bankruptcy so be sure to ask your lawyer about possibly reducing the payments. Many times, payments can be lowered through Chapter 7 bankruptcy. There are a few requirements that you have to meet to be eligible, though. You have to have bought the car more than 2.5 years ago, your loan’s interest rate needs to be over a certain amount, and your employment history has to be good.
Rest assured, when you file for Chapter 13 bankruptcy, you still have the ability to take out mortgage and car loans. It’s a bit more difficult, though. Your bankruptcy custodian will need to approve the loan. You will need to make a budget and prove that you will be able to afford your new loan payments. Also, be sure you can provide an explanation as to why this purchase is necessary.
Before filing for bankruptcy, learn your rights. Certain unscrupulous creditors will try to convince you that certain debts can’t be discharged in bankruptcy. Only a small number of debts are not dischargeable, including student loans and child support obligations. If the debt collector tries to tell you that your debts, which do not fall into those categories, cannot be bankrupted, take a note of it, look up the debt type, and report them to your state’s attorney general office.
Be certain to be transparent about all of your financial information when the filing of for personal bankruptcy. Forgetting anything can cause a delay, or even a dismissal. No matter how insignificant a sum seems, include it in the documentation. Anything, like a job on the side, assets, like cars, and any outstanding loans should be included.
Don’t take too long when trying to decide whether you want to file bankruptcy. Although it may be tough to admit you are in financial trouble, the more you wait the higher the debt becomes. If you are not sure, gather all of your information and spend a little time speaking with a bankruptcy attorney; their experience can help you make the right decision.
Write down every one of your debts. After this, you can file bankruptcy, so make sure this document is accurate. Be 100% certain that the amounts you are claiming as being owed are true and correct. Take your time during this process; don’t rush and make sure all of your figures are correct.
You should obtain a copy of your credit report from all three reporting agencies soon after you declare bankruptcy. Check that your reports accurately reflect all your closed accounts and discharged debts. Resolve any problems immediately so you can build up your credit score as quickly as possible.
Be sure that you include all debts you want discharged in your bankruptcy filing. Any debts omitted from the paperwork will not be covered in the discharge. You need to ensure that you account for every debt, so you do not miss any that are eligible for being discharged.
Even though bankruptcy is always a personal choice, do not file without checking out all other options. Be wary of debt consolidation services, some of these services are scams and are only after your money. Remember to use the tips from this article, and make good financial choices to avoid future debt.
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