Filing for bankruptcy is not a pleasant experience. Bankruptcy is a touchy subject, and people often don’t want to mention it when someone asks about their finances. With the solid advice in the article below, you may be able to make a better choice.
Do not consider paying off tax debt with credit cards and filing for bankruptcy afterward. It won’t work. In most states, you will still owe money to the IRS and have to take care of the interest of your credit cards. The rule here is that if you can get the tax discharged then you can get the debt discharged. So using your credit card to pay off your tax obligations, then filing for bankruptcy, can actually hurt you instead of help you.
Don’t look at bankruptcy as a first step. Look at all the other options you may have first. You have other choices, including consumer credit counseling. Bankruptcy stays on your credit for a whole decade, so if there are less drastic options that will solve your credit problems, it is in your best interest to make use of them.
Retirement Accounts
If you are faced with the choice of filing for bankruptcy or using your emergency fund or retirement accounts to pay creditors, opt to file for bankruptcy. You should never touch your retirement accounts, unless you have absolutely no choice. Although it is quite normal to use some of your savings, ensure that you leave enough in your account for emergencies.
One of the most important things to remember when filing for bankruptcy is to be honest and truthful every step of the way. Do not try to shield some assets or income from your creditors. This can get you in serious trouble and prevent your bankruptcy petition altogether.
Do not give up hope. When you file for bankruptcy you may be allowed to recover property like your car, electronics or jewelry that might have been repossessed. You may be able to get your property back if fewer than 90 days have passed between the repossession and are filing for bankruptcy. Interview and research attorneys before choosing one to help you with your bankruptcy.
You should never pay for your first consultation with a bankruptcy attorney. Make the most of this free consultation by asking lots of questions. Most lawyers provide a consultation for free, so consult with many of them before picking which one you want to hire. Only make your decision if all your questions and concerns are adequately addressed. It’s isn’t necessary to make a choice right away. If you’re unsure, don’t hesitate to talk to multiple bankruptcy lawyers.
Stay abreast of new laws that may affect your bankruptcy if you decide to file. These kinds of laws are constantly changing and it is important that you are aware of these changes, so that you can learn how to properly file for bankruptcy. Keep up with your current state’s laws and regulations to figure out what steps you should take.
Chapter 13
Before filing for bankruptcy, determine whether Chapter 13 or Chapter 7 is appropriate for your financial situation. In Chapter 7 most of your outstanding accounts will essentially be erased. All the things that tie you to creditors will go away. Chapter 13, on the other hand, involves a five year payment period before any remaining debts are cancelled. It is vital that you know the differences between these types of bankruptcies, in order to find the option that’s best for you.
Don’t forget to enjoy yourself during your bankruptcy. The filing process is extremely stressful for a lot of the people who go through it. This stress could morph into clinical depression, if you fail to adequately address the problem. After you have finished filing for personal bankruptcy, your life will improve.
File for bankruptcy before your finances get completely out of control. What a lot of people do is ignore the fact that they are in a financial crisis and think that their debt is not going to catch up to them. Debt can become a big problem rapidly, and if you fail to handle it, you can face foreclosure or garnishment of wages. As soon as you stop denying that your debt is unmanageable, seek the advice of a good bankruptcy attorney.
It is important to understand that a bankruptcy more beneficial to your credit than multiple overdue or missed payments on debt. While bankruptcy will show up in you credit file for the next 10 years, you can begin the process of making your credit situation better right away. Among the advantages of bankruptcy is that of a clean slate.
Quickly decide to start being more fiscally responsible prior to filing. In other words, you do not want to waste your efforts here by starting to ring up more and more debt. Creditors and judges look at your current and past financial history when they make a decision about your personal bankruptcy. You need to show the court that you have changed and are ready to act in a financially responsible manner.
You do not always need to give in and file bankruptcy. The tips written in this guide can lead you to the right path in avoiding bankruptcy. Use the information you have learned here, and see how you can revamp your finances and protect your valuable credit history.
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