It can be very hard to live with a personal bankruptcy filing. Your financial options become very limited. But remember that there is always a way out of a situation you are in, so do not let bankruptcy scare you.
If you are considering paying your taxes with credit cards and turning around and filing bankruptcy–they are on to you. In many parts of the country, you cannot get this debt discharged, and in the end you will be left owing the IRS a big sum of money. If the tax can be discharged, so can the debt. Therefore, you have no reason for use of a credit card, if the amount is to be discharged in due process of the bankruptcy.
If you suspect that bankruptcy filing may be a reality, don’t try to discharge all your debt in advance by emptying your retirement or saving accounts. Retirement accounts should never be touched if it can be helped. You may need to withdraw some funds from your savings account, but don’t take everything that is there as you will be bereft of any financial backup if you do.
Getting Unsecured Credit
You might experience trouble with getting unsecured credit after filing for bankruptcy. Secured cards can be a great way to get started if this happens to you. This will show people that you are serious about getting your credit record back in order. Once you’ve built up a history of on-time payments, you may start getting unsecured credit again.
Consider Chapter 13 bankruptcy, if you chose to file. 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. You can keep personal possessions, as well as real estate, while paying into a debt consolidation system. These kinds of plans usually range across 3, 4 and 5 years. Once this is done, all your unsecured debt will get discharged. Remember that missing a payment to the plan will result in your case being dismissed.
Before declaring bankruptcy, it is important to know your rights. Certain unscrupulous creditors will try to convince you that certain debts can’t be discharged in bankruptcy. You should know that only a few debts cannot be erased, including student loans and child support. If a bill collector attempts to say their bill cannot be discharged, look it up. If they are wrong, report them.
Decide right up front that you are not going to feel embarrassed or ashamed about needing to file bankruptcy. Many people get feeling of guilt when going through bankruptcy. Wallowing in these emotions benefits no one, and only serve to harm your own mental health. A good way to deal with bankruptcy is to make sure that you keep a stiff upper lip.
Facing bankruptcy is a negative situation that can bring on stress. To relieve yourself of some stress and keep thing organized, hire a good lawyer. Do not let price be the only factor. It is not necessary to engage the lawyer who charges the highest fees; all you need is a lawyer of high quality. Get referred from others who’ve been in the same situation, check the BBB, and interview several people through free consultations. It is even possible to watch a court hearing in order to see how well an attorney handles a case.
If you know that you are about to file for bankruptcy, don’t exploit the information asymmetry and get huge cash advances on your credit cards. That is considered fraudulent behavior, and you can still have to pay the credit card back, bankruptcy or no.
Even if you go bankrupt, you do not need to be limited forever. When you save your money and show lenders that you are making serious efforts to reestablish your credibility they look kindly at this. So implement a savings program, and watch how much it helps you when you need to apply for a home or car loan.
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