It can be a difficult process to file for bankruptcy. There are different kinds of bankruptcy you can file, and the kind you select depends on your individual financial picture and what types of debt you have. Therefore, it is essential that you learn about bankruptcy prior to petitioning the courts for bankruptcy protection. This article will help you learn more about personal bankruptcy.
If you suspect that bankruptcy filing may be a reality, don’t try to discharge all your debt in advance by emptying your retirement or saving accounts. Retirement accounts should never be touched if it can be helped. Although you may need to tap into your savings, you should not use up all of it right now and jeopardize the financial security of your future.
Secured Card
After filing for bankruptcy, you may have difficulty getting approved for unsecured credit. If you find yourself in this situation, you may want to think about getting a secured card or two. They offer you the chance to demonstrate the seriousness with which you now take your financial obligations. If you pay your secured card off on time, you’ll eventually find that companies will start offering you unsecured credit.
Rather than checking online, try to get recommendations from friends or family about a suitable bankruptcy attorney. Some companies just want to take advantage of you, so it is important that you have help from someone you trust.
You should never give up. Once bankruptcy has been filed, you may be able to regain possession of items such as electronic goods or cars that were taken away from you. There is a chance that you can get back your property if it has been less than ninety days since repossession. Consult with a lawyer who can advise you on what you need to do to file a petition.
If you are meeting with a lawyer to discuss bankruptcy, the initial consultation should be free so ask every question you have. Free consultations are standard practice among bankruptcy lawyers, so interview multiple candidates before making a final decision. Don’t choose a lawyer until your questions about bankruptcy are sufficiently answered. You need not decide right away. You can take as much time as you need to meet with different lawyers.
Chapter 7
Know the differences between Chapter 7 and Chapter 13 bankruptcy. Chapter 7 bankruptcy completely wipes out your debt. The ties with the creditor will be broken. With a Chapter 13 bankruptcy, you will have to make payments for 5 years before the debts are forgiven. It’s important to know what differences come with every type of bankruptcy. This will let you find out what’s best for you.
It is imperative that you know for sure that bankruptcy is the option you need. Consolidating current debt could make it easier to manage. Declaring bankruptcy is a very involved process that can cause a good deal of anxiety. Credit will be much harder for you to come by after you file for bankruptcy. Needless to say, if some alternative strategy will allow you to take care of your debts, you should give it a try before resorting to bankruptcy.
Unsecured Debt
Consider filing for Chapter 13 bankruptcy. You are probably eligible for Chapter 13 if your income is consistent and your unsecured debt is under $250,000. The benefit of this plan is that you retain personal belongings and private real estate and your debts are repaid by an organized payment plan. Typically, this goes on for roughly three to five years, and once this time has expired, your unsecured debt is eliminated. Remember that if you even miss one payment that’s due under this plan, the court could dismiss the whole case.
Look into all of your options before you choose to file for bankruptcy. You might be able to address your debts by arranging a repayment plan or a reduction in your interest rates. Get professional advice on these matters from a bankruptcy lawyer. If foreclosure looms, think about getting your loan plan modified. The lender can help your financial situation by getting interest rates lowered, dropping late charges, and in some cases will allow you to pay the loan over a longer period of time. When push comes to shove, creditors want their money, and they are willing to make concessions to get it and prevent the debtor from declaring bankruptcy.
You can take out a mortgage or car loan while filing Chapter 13 bankruptcy. It’s a bit more difficult, though. You must meet with a trustee to gain approval for a new loan. Create a budget and prove that you will be able to afford it. You will also need to explain why it is necessary for you to take out the loan.
Be careful how you pay off any debts prior to filing for personal bankruptcy. Bankruptcy law may actually prevent you from repaying your credits for three months. Worse, if you’ve taken out a loan from your family, you can’t repay them for a whole year before filing. Read up on the rules before you make any decisions about your finances.
After filing bankruptcy, many people refuse to use credit cards or get loans. This is not wise because you need to rebuild a good credit file. If you don’t use your credit, you won’t be able to make big purchases on credit in the future. Take it slow and get yourself one credit card and slowly rebuild your credit.
As you now know, bankruptcy is not a decision that should be made lightly. If you decide bankruptcy is right for you, take the proper precautions. This could be a new beginning and a clean slate for you.
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