Filing for bankruptcy is never a day in the park. Bankruptcy can mean bad things and it is usually an embarrassing thing to mention to people when they ask about your financial status. Don’t give into it and be sure to use this advice to figure out what you need to know to avoid bankruptcy.
Many people find that they must file for bankruptcy protection because they have more debt than they can afford to repay. If this is happening to you, then learn about the laws where you live. Every state has a separate law having to do with bankruptcy. You may find your home is safeguarded in one state, while in another it isn’t. It is important to understand the laws in your state before filing for bankruptcy.
Be sure you’re doing what’s right before you file for bankruptcy. You have other choices, including consumer credit counseling. Bankruptcy has a negative effect on your credit reports, in that it is permanently there. Before you take this step, make sure all your options have been considered.
Do not use your retirement fund or savings to pay off creditors. 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.
Secured Card
Getting unsecured credit post-bankruptcy will likely be difficult. If you are in this situation, applying for a secured card may be the answer. This will allow you to start building a good credit history while minimizing the bank’s risk. After using a secured card for a certain amount of time, you might be offered an unsecured card once again.
Never pay to have a consultation with a lawyer, and ask a lot of questions. Seek free consultations from a handful of lawyers, before deciding which one to hire. You should make a final decision only once all of the questions or concerns are sufficiently attended to. There is no need to feel rushed to decide to file after you talk with your bankruptcy lawyer. You can take as much time as you need to meet with different lawyers.
It is possible to keep your home. Filing for bankruptcy does not always mean you will end up losing your home. You might be able to keep your home, contingent on certain factors, such as your home decreasing in value or having a second mortgage. Another option is the homestead exemption that has certain income and financial requirements, but may also allow you to keep your home.
Be certain that bankruptcy truly is your best option. Perhaps consolidating your existing debt can make it easier to manage. Bankruptcy is a long process that can be stressful. Your future credit will be affected by these actions. Thus, you must make certain that bankruptcy really is the only viable solution to your problems.
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. Chapter 13 bankruptcy permits you to remain the owner of your properties, while allowing you to repay your debt using a debt consolidation loan. This lasts for three to five years and after this, your unsecured debt will be discharged. Remember that if you even miss one payment that’s due under this plan, the court could dismiss the whole case.
Speak with an attorney about any fears you have about losing your car. You may even be able to get your monthly payment reduced. Chapter 7 bankruptcy is one of the most common and effective. The car loan must have been initiated prior to 910 days before your petition. It must carry a loan with high interest. You should also have a steady history of work.
Rest assured, when you file for Chapter 13 bankruptcy, you still have the ability to take out mortgage and car loans. Of course, it’s difficult. You must meet with a trustee to gain approval for a new loan. You will need to make a budget and prove that you will be able to afford your new loan payments. You will always have to let them know why this item needs to be purchased.
Pick the right time to file. When it comes to filing for personal bankruptcy, timing is everything. Sometimes, you may need to file quickly; however, at other times, you should wait until the worst is over. Talk with a bankruptcy attorney to find out the ideal timing for filing based on your particular situation.
Before filing for bankruptcy, you must be educated on the specifics of all bankruptcy laws. For instance, somebody cannot transfer assets from a filer’s name up to a year after they file. Other laws you need to know include debt-based regulations. You cannot increase debt via credit cards prior to filing a claim. Your finances basically have to remain frozen.
Consider all of your options before filing for bankruptcy. One option to consider is credit counseling. There are various non-profit companies that may be able to help you. These companies lower your interest and payments by working with your creditors. You make your monthly payments to the credit counselors, and they pay the money to each creditor.
Several months after discharge, get copies of credit reports from the big credit reporting agencies. You want to see an accurate record of the closure of your accounts and the discharge of your debts. Resolve any problems immediately so you can build up your credit score as quickly as possible.
In most cases, bankruptcy isn’t really your only option. The information contained in this article can help you to avoid having to file for bankruptcy. Start using what you learned today and see how much of a change you can make in your life, so that you do not have to harm your credit history.
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