You’ve heard it before and you’ll hear it again–the economy is in rough shape. In a weak economy, many people find themselves out of work and accumulating debt. Too much debt can lead to bankruptcy and all of its ill effects. If you, a friend, or a loved one is in financial trouble, this article could help decide if bankruptcy is the right option.
Many people need to file for bankruptcy when they owe more money than they can pay off. Study the laws in you state to learn what you need to do and what your options are. Each state has its own set of rules regarding bankruptcy. Some states may protect you home, and some may not. You should be aware of local bankruptcy laws before filing.
Credit History
Be sure you’re doing what’s right before you file for bankruptcy. Look into other options, such as consumer credit counseling. Bankruptcy is a serious negative on your credit history so make sure you have no other options before you file. It is important to keep your credit history as positive as possible.
As filing bankruptcy becomes more of a reality, don’t use your entire savings or your retirement funds to pay creditors or attempt to resolve insolvency. Retirement accounts should never be accessed unless all other options have been exhausted. Dipping into savings may need to happen, just don’t totally wipe it out, or you might not have much financial security later.
If you are seriously thinking of filing bankruptcy, make sure that you contact an attorney. Having a lawyer on your side is the best way to avoid mistakes and bad decisions. A lawyer that specializes in bankruptcy can make sure you are following the correct procedures in your filing.
See if there is an alternative you can use before declaring bankruptcy. For example, consumer credit counseling services can often help you figure out a workable repayment plan with creditors. Negotiating with creditors is another option, but creditors are notorious for “forgetting” these agreements, so get them in writing!
It is important to know how Chapter 7 filings differ from Chapter 13 filings. Take the time to learn about them extensively, and then figure out which one will be best for your particular situation. If you’re really not sure how this all works after your research, meet with your lawyer and ask them prior to making a decision.
Be sure that bankruptcy really is your best option. Some people have great luck with handling debt with debt consolidation, which means taking out only one loan to pay off many loans. Filling for bankruptcy is a lengthy, stressful process. It will also make it tough for you to secure credit after your filing is complete. Therefore, you must make sure that there is no other option that you could take before you file for bankruptcy.
Chapter 13
Learn what you can about Chapter 13 bankruptcies. You are probably eligible for Chapter 13 if your income is consistent and your unsecured debt is under $250,000. Filing a Chapter 13 will let you keep personal items and real estate while you pay down your debt in a consolidation plan. Typically, any plan you develop will last around 3-5 years. Afterwards, any remaining unsecured debts will be discharged. Bear in mind that if you miss a single payment that is due under your plan, the entire case will be dismissed by the Court.
Filing for bankruptcy is not the best choice if your monthly income is enough to cover your bills. Although bankruptcy may feel like a simple method of getting out of your large debt, it leaves a permanent mark on your credit history for up to 10 years.
Make sure the time is right when you file a bankruptcy claim. Timing can be critical when it comes to personal bankruptcy cases. Sometimes, you may need to file quickly; however, at other times, you should wait until the worst is over. Speak with a bankruptcy lawyer about when the best time is to file for your specific needs.
Do some research about bankruptcy laws before filing for bankruptcy. For instance, you may not be aware that a filer is forbidden from transferring assets from his or her name for one full year before the petition is filed. It is also against the law to max out your credit cards before filing for bankruptcy.
If you acquire a new job prior to filing for bankruptcy, keep moving forward with your filing plans. Although you have a new job, bankruptcy may still be right for your situation. The timing of your filing can lead to a more favorable bankruptcy resolution. Post your filing before you begin earning money at your new job. In this way, your repayment means will be determined using your income prior to your new employment.
Even though our economy is slowly improving, many people still do not have jobs or decent wages. You can avoid bankruptcy even with no steady source of income. Simply remain persistent and positive. Opportunities will eventually come your way. Keep these thoughts close and it will enable you to have a better chance of avoiding the need to file bankruptcy. I wish you the best of luck.
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