If your car or other valuable items are about to be repossessed due to back taxes, you are probably quite afraid of what will happen. When you file for personal bankruptcy, you will be able to sort out your finances and end calls from debt collectors. To make your way through filing for bankruptcy smoothly, follow the tips presented in this article.
If you are thinking about paying off your tax obligations with a credit card and then filing bankruptcy, think again. Most places will not consider the debt dischargeable, meaning you will have to pay the IRS a lot of money. Rule of thumb is if the tax is dischargeable, then the debt will be dischargeable. So, there’s no reason to make use of a credit cards if it will not be discharged in bankruptcy.
You might experience trouble with getting unsecured credit after filing for bankruptcy. If you do, then try applying for a coupe of secured cards. If you pay what you owe back promptly at all times, you can show that you are taking steps to be responsible about your payments and credit rating. It will take time, but when creditors see a pattern that satisfies their need to see your good faith with payments, you will then be able to apply for unsecured cards.
If you can, get a word-of-mouth referral for a lawyer. There are many companies who take advantage of financial desperation; that is why it is important that you get someone that is trustworthy.
Date Information
Before you file, make sure you understand current bankruptcy laws. Make sure to get the most up-to-date information concerning the bankruptcy laws in your state. Your state’s legislative offices or website will have up-to-date information about these changes.
Do some research to find out more about Chapter 13 and Chapter 7. Every one of your debts will be gone if you decide to go with Chapter 7. The ties with the creditor will be broken. If you choose to file for Chapter 12 bankruptcy, you’ll be put into a 60-month plan for repaying your debts before they’re eliminated. It is worth while to take your time to research both types of bankruptcy to decide which option works best for you, and your financial situation.
Safeguard your home. Filing for bankruptcy doesn’t automatically involve losing your home. There are mitigating factors, such as lose of value, or multiple mortgages. Otherwise, there is a homestead exemption you should look into, as it might let you stay in your house.
Repayment Plans
Investigate other alternatives before resorting to bankruptcy. A lawyer that specializes in bankruptcy law can help advise you of other options, such as repayment plans and reducing interest rates to relieve some of the burden. If you are looking at foreclosure, think about a loan modification program. The lender may be willing to reduce interest rates, eliminate late charges or extend the life of the loan. Creditors want their money. Often, they are willing to work out repayment plans with you in order to get it.
Talk to an attorney about reducing your car payments so that you can keep your vehicle. Sometimes, as part of the bankruptcy filing, your auto loan can be restructured so that you pay less each month. 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.
Before you decide to file for Chapter 7 bankruptcy, consider how it could affect other people on your credit accounts, such as family members or business partners. Once you complete a Chapter 7 bankruptcy, you will be free of any responsibility of debt, which could put all responsibility on someone close to you. However, anyone sharing the loan with you may be forced to pay back the entire amount for the amount in full, which spell financial disaster for them.
Always look into other options and make personal bankruptcy your last resort. Also keep in mind many debt counselling companies are scams that can get you further into debt. If you must file bankruptcy, learn from your mistakes and become a more conscientious consumer.
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