Filing for personal bankruptcy protection is an important strategy for people that have had assets, such as their vehicle, seized by the IRS. While bankruptcy is a big hit to your credit history, it can be the only option. The following article will provide some basic information about filing for bankruptcy and its possible consequences.
Don’t use a credit card to pay off your taxes before filing for bankruptcy. In some places the debt can not be discharged, and you may still need to pay the IRS afterward. Should the tax be dischargeable, the debt is often dischargeable as well. There isn’t any reason to use a credit card to pay the tax bill since the bill can be discharged anyway.
When it soaks in that filing for personal bankruptcy, don’t use all of your retirement funds, or all of your savings to resolve insolvency or pay creditors. Retirement accounts should never be touched if it can be helped. You may have withdraw from your savings every now and then, but try to leave yourself some financial security for the future.
Credit Card
It’s not uncommon to learn soon after bankruptcy that you are unable to get an unsecured credit card easily. Look into getting a secured credit card in order to get back on your feet with building credit. Using a secured card not only helps to rebuild your credit, but it also keeps you from going more in debt with credit card bills. In time, you might be granted unsecured credit again.
You may end up losing more than you bargained for when you file a bankruptcy claim, so be sure that you know just which assets may be taken before filing. To find an itemized list detailing assets exempt from bankruptcy, find the Bankruptcy Code. You need to compare this list to the assets you own so that you are not surprised when certain assets are seized. You may find yourself unpleasantly surprised when the things you value the most are taken from you without warning. This is why it is very important the familiarize yourself with this list.
It’s a good idea to meet with a number of bankruptcy lawyers before settling upon one. The majority of them offer free initial consultations. By law, paralegals and assistants can not give legal advice, so be sure that you are meeting with an actual attorney. Hiring a lawyer could help you become comfortable with the legal things that you will encounter.
Put forth the effort to grasp the distinctions between Chapter 7 and Chapter 13 bankruptcies. Weigh all the information you can find on- and off-line to make an educated decision. Before making any decisions, discuss the information you have learned with your lawyer.
Before ultimately deciding whether or not to file for bankruptcy, be sure to weigh the different options available to you. Talk with a bankruptcy lawyer and ask about alternatives, such as debt consolidation or negotiating with creditors. If a foreclosure is your reason for filing look into your options with your bank first, such as a loan modification. The lender may be willing to reduce interest rates, eliminate late charges or extend the life of the loan. When all is said and done, the creditors want their money, so sometimes it’s best to deal with a repayment plan than with a bankruptcy debtor.
Before you choose Chapter 7 bankruptcy, think about what effect that is going to have on any co-signers you have, which are usually close relatives and friends. When filing Chapter 7, you are not longer liable for the debts that you and a co-debtor signed for. 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.
Don’t let shame consume you during the bankruptcy process. For many people, bankruptcy is a source of guilt and feelings of worthlessness. These feelings can cause you to make rash decisions and cause psychological problems. Keeping a positive attitude during worrisome financial trouble is the smartest way to deal with a bankruptcy.
Avoid using bankruptcy as a last resort. Do not avoid your creditors; they will not go away. It is important to decide on a course of action as soon as you begin experiencing financial problems. Debt could become uncontrollable and by not dealing with them properly, your wages could be garnished or you may find your home in foreclosure. As soon as you’ve decided that you no longer have a handle on your debts, consult a bankruptcy lawyer to see if bankruptcy is right for you.
As mentioned earlier, filing a personal bankruptcy is an ever-present alternative. Filing for bankruptcy should not be your first choice. Knowing how to best go through the bankruptcy process can reduce one’s troubles in the long run and make it easier to retain one’s possessions.
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