Being faced with the decision to file for bankruptcy can put you under a lot of stress. If you are in financial trouble, it’s easy to feel trapped and a little scared about your future. Filing for bankruptcy doesn’t mean you are permanently barred for owning things that require large loans, such as an automobile or a house. Read these tips to find out more.
Do not attempt to pay your taxes with your credit cards and subsequently file for bankruptcy. Most of the time, you won’t be able to discharge this debt, and you could make things worse with the IRS. Should the tax be dischargeable, the debt is often dischargeable as well. This makes using a credit care irrelevant, since bankruptcy will discharge it.
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 not use your retirement savings unless the situation calls for it. If you do have to dig into your savings, make sure that you leave enough to sustain you and your family for a couple of months.
Getting Unsecured Credit
You might experience trouble with getting unsecured credit after filing for bankruptcy. If this happens to you, think about applying for a couple of secured credit cards. When you do this, it shows your determination to fix your credit history. Once you’ve built up a history of on-time payments, you may start getting unsecured credit again.
Rather than checking online, try to get recommendations from friends or family about a suitable bankruptcy attorney. You want your bankruptcy to go smoothly, and the Internet is rife with fly-by-night companies whose only goal is to prey upon the financially desperate.
Keep working to improve your situation. Filing for bankruptcy may allow you to get back property, such as an auto, jewelry, or electronics, that you may have had repossessed. Filing for bankruptcy may allow you to regain ownership of recently repossessed property. Speak with your attorney about filing the correct petition to get your property back.
Chapter 7
The two main kinds of bankruptcy are Chapter 7 and Chapter 13. Make sure you understand them so you know what is best for you. The Chapter 7 variety can help you eliminate your debts almost entirely. This type of bankruptcy ends any relationship you might have with creditors. Filing Chapter 13 differs by requiring you to agree to a 60 month plan to repay your debts before they are totally eliminated. It is important that you understand the differences between the different types of bankruptcy, so that you can decide which option is best for you.
Many bankruptcy lawyers offer free consultations, so go to several before choosing one. Talk to the lawyer and not his assistant, who may not be legally able to help you. Take some time to talk to different lawyers to find one that fits your needs, and meshes well with you.
Consider Chapter 13 bankruptcy, if you chose to file. If you have less than a quarter of a million dollars in debt that is unsecured and a regular income, you are eligible to file a Chapter 13. That way, you can hold onto your personal assets and pay back a portion of your debts pursuant to an approved plan. This plan usually lasts from 3 to 5 years, after which, you will be discharged from all unsecured debt. Just know that missing one payment could cause your case to be dismissed.
Do not let bankruptcy consume you, make sure you make time for your friends and family. Undergoing bankruptcy can be a difficult experience. It takes time and a lot of people feel stressed and ashamed throughout this procedure. Some folks tend to stay in the shadows until their case has concluded. Pulling away from people who care for you will not help the situation, and can cause your negative feelings to intensify. Remember that it is not your families fault for your financial hardships and use this time to pull together and be strong.
Credit Score
If you are making more money than you owe, bankruptcy should not even be an option. You should know that filing for bankruptcy will ruin your credit score for at least ten years and that improving your credit score will be expensive.
After your initial filing, take time to enjoy yourself a bit and get your mind off of it. Many people who undergo this process become way too stressed out. Depression and burn-out from pent of stress will do nothing to help your situation, so it is critical to let go a little. Your life will see improvement after you get past the bankruptcy.
Bankruptcy is a step that many people have to take, and as you can see, it’s not a permanent black mark. Get on track and stay there to show lenders your positive new efforts. All you need to do really is start saving your money and rebuild your credit so that you have a chance to get that next loan.
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