Deciding to file for bankruptcy is serious and should be looked at seriously. Keep reading the ideas in the piece that follows in order to understand what you can expect and what ought to go into making such a major decision. Learn as much as you can beforehand.
Bankruptcy Laws
Millions of Americans file for bankruptcy each year because they can not pay their bills. If you have unmanageable debt, you need to familiarize yourself with regional bankruptcy laws. Different states have different laws regarding bankruptcy. Your home is safe in some states, but in others it’s not. Become acquainted with local bankruptcy laws before filing.
When it appears likely that you will file a petition, do not start spending your last remaining funds on debt repayment. Unless there are no other options, your retirement funds should never be touched. Though you may need to use a bit of your savings, try hard to maintain some of your reserves so that you have some degree of flexibility going forward.
Although you can find many bankruptcy attorneys listed in your local Yellow Pages or online, it’s best if you can find one through the personal recommendation of a friend, family member or acquaintance. Some companies just want to take advantage of you, so it is important that you have help from someone you trust.
Never pay for a consult with a bankruptcy lawyer, and ask plenty of questions. Since most attorneys offer free consultations, meet with a few attorneys before deciding who to hire. Only choose a lawyer if you feel like your questions were answered. You can think about your decision before making a commitment. Be sure to talk with a number of lawyers, and compare the information you receive.
Don’t file for bankruptcy until your represented by an attorney. With all the ins and outs of bankruptcies, it can be hard to grasp all the knowledge. Choose an attorney versed in personal bankruptcy to make sure you don’t make mistakes.
Do some research about laws and legislation before filing. Bankruptcy laws are in constant flux, so just because you knew the law last year doesn’t mean that the laws will be the same this year. To learn about the changes, you should check out the website of your state’s legislation or you can call their office.
See if there is an alternative you can use before declaring bankruptcy. For instance, a consumer credit counseling program may be a better bet if your debts are relatively small. You may also find success in negotiating lower payment arrangements yourself, but be certain to get any arrangements with creditors in writing.
Chapter 7
You need to educate yourself on the differences between Chapter 7 and Chapter 13. If you file using Chapter 7 bankruptcy, you will get all your debts eliminated. With very few exceptions, the connections between you and your creditors will be severed. But, with Chapter 13, you will be in repayment plan for about 5 years prior to any debts you have being totally dissolved. It is vital that you know the differences between these types of bankruptcies, in order to find the option that’s best for you.
Learn how Chapter 7 bankruptcy and Chapter 13 bankruptcy differ from each other. Take the time to find out about each one online, and look at the advantages and disadvantages of each. Do not hesitate to have your lawyer explain any details that seem difficult to grasp. This will help ensure you make the right choice when filing.
It is important to look at your financial situation from all possible angles before you decide to file for bankruptcy. You can get your interest rates reduced or enter into a debt repayment plan. Before you file bankruptcy, ask your attorney if any of these are viable alternatives for you. If you are about to lose your house, talk to your lender about a loan modification. This type of plan allows your lender to work with you eliminating charges, extending your loan, and lowering interest rates to help you pay back the loan without drowning in debt. When all is said and done the creditors just want their money, and more often than not will work with you on a repayment plan.
Keep in mind that filing for Chapter 7 bankruptcy may affect other people than just you, including family members, and in some cases, business associates. You can relieve yourself of any liability for debts that you may share with someone else through a Chapter 7 filing. Any co-debtor may well be held responsible for paying off the total remaining amount of the debt, though.
Before you file for personal bankruptcy, take great care in paying off your debts. When you’re planning on filing bankruptcy, your finances have to be in a state of limbo, for lack of a better term. Paying off creditors, transferring assets, and acting in any way other than financially strapped may result in a failed claim. Study applicable regulations prior to making any financial choices.
As you can see from the above article, bankruptcy doesn’t just happen. There are many things that must be taken care of, and must be done right. By using the above suggestions, you will be sure that all your Ts are crossed and all your Is are dotted when it comes to filing for bankruptcy.
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