Filing for personal bankruptcy protection is an important strategy for people that have had assets, such as their vehicle, seized by the IRS. Filing for bankruptcy will ruin your credit score, but it might be the only way of getting out of debt. Continue reading for more information about how and why to file for bankruptcy.
Do not consider paying off tax debt with credit cards and filing for bankruptcy afterward. It won’t work. Generally, this type of debt is not covered by bankruptcy filing, and you will still have a large debt owing to the IRS. If the tax has the ability to be eliminated, the debt can be too. So, in short, do not use your credit cards to pay off debts right before you file for bankruptcy.
Make sure you are always providing honest documentation whenever you have to file for personal bankruptcy. You can lose the right to file bankruptcy now or in the future if you try to withhold information about your assets and income. So it is critical that you disclose everything honestly to to avoid that and any other penalties the trustee might impose if he discovered your attempt to hide information from the court.
When it comes to informing your attorney about your case, don’t be fearful. You cannot expect your lawyer to remember every important detail without some reminder from you. Speak up. This is your life, and your future depends on it.
Don’t file for bankruptcy until you know what assets of yours can and can’t be seized. The Bankruptcy Code provides a listing of the various asset types that are not included in the bankruptcy process. Make sure that you review this list before you decide to file, to see if you can hang on to your most important possessions. If you don’t heed that advice, you might find yourself getting surprised when your favorite things are repossessed.
Be completely honest whenever you file for personal bankruptcy. Hiding any asset or liability is a risk that will bite you in the end. The person you choose to file with needs to know both the good and bad aspects of your finances. Divulge all of your information so that you and your lawyer can devise the best strategy for dealing with your situation.
Before you file for personal bankruptcy, be sure that you are cognizant of all current laws. Bankruptcy law has changed substantially in recent years, and therefore you must understand how such changes may affect your situation. Your state’s legislative offices or website will have up-to-date information about these changes.
Chapter 13 Bankruptcy
Look into filing Chapter 13 bankruptcy. You are eligible to file Chapter 13 bankruptcy if your income is reliable and your unsecured debt does not exceed $250,000. This will allow you to keep your personal property and real estate and repay your debts via a debt consolidation plan. This plan usually lasts from 3 to 5 years, after which, you will be discharged from all unsecured debt. Missing a payment under these plans can result in total dismissal by the courts.
Avoid filing for bankruptcy if you make more money than your monthly bills. Although you may see bankruptcy as a free pass to eliminate your debt, if you can slowly whittle away at your debt with your income, it will be much better than killing your credit score with a bankruptcy filing.
Once you have completed the bankruptcy filing, you should take time to do something you enjoy. Bankruptcy is a stressful process: you will have to go over your bad financial decisions and perhaps feel ashamed about your decision. That stress can lead to depression, if you don’t take the right steps in fighting it. Once the process is complete your life will improve.
If you’re concerned about the details of keeping your car, try to ask your attorney about details regarding lowering your monthly payments. A lot of the time, your payments may be lowered due to Chapter 7 bankruptcy. There are a few requirements that you have to meet to be eligible, though. You have to have bought the car more than 2.5 years ago, your loan’s interest rate needs to be over a certain amount, and your employment history has to be good.
We would like to reiterate that you always have the option of filing for personal bankruptcy. That said, you should think twice before filing, since it leaves a huge black mark on your credit. Don’t sit back and let the process take control of you. Take control of the process by doing your research so that you don’t lose more than you need to.
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