You are not alone if you have become a victim of debt. They are harassed by collection calls and creditors all while the bills keep piling up. If you are in that situation, it may be time to consider personal bankruptcy. Read this article to determine if this is the right approach for you.
Think twice if you have struck upon the idea of paying off your taxes by credit card and subsequently filing for personal bankruptcy. In many areas of the country, this debt will not be dischargeable, and you could be left owing a significant amount to the IRS. A common rule is that dischargeable tax means dischargeable debt. So, there is no reason to use your credit card if it will be discharged in the bankruptcy.
After filing for bankruptcy, you may have difficulty getting approved for unsecured credit. If this is so, apply for a secured card or two. This will allow you to start building a good credit history while minimizing the bank’s risk. After a certain time, you will then be able to acquire credit cards that are unsecured.
Personal Bankruptcy
Be sure to hire an attorney before you embark upon filing for personal bankruptcy. Personal bankruptcy is quite complex, and it is entirely possible that you will not be able to familiarize yourself with all the laws and processes. A qualified bankruptcy attorney will guide you through the steps and help you do everything properly.
Check into less drastic solutions prior to declaring bankruptcy. Those with smaller debts may find use in a program for consumer credit counseling. Also, if you just contact your creditors and speak to them plainly and truthfully, the odds are good that you can negotiate a better payment structure that you can afford.
Chapter 7
Know the differences between Chapter 7 and Chapter 13 bankruptcy. Chapter 7 eliminates all debts. Your ties with all creditors will get dissolved. Chapter 13, on the other hand, involves a five year payment period before any remaining debts are cancelled. 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.
It is important to know how Chapter 7 filings differ from Chapter 13 filings. Spend time researching the advantages and disadvantages of filing for each one of these. If you’re really not sure how this all works after your research, meet with your lawyer and ask them prior to making a decision.
Investigate your other alternatives before you decide you have to go with bankruptcy. Maybe you can just consolidate debt to make it simpler to deal with. 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. You only want to file for bankruptcy after you have exhausted your other options for dealing with your debts.
Remember that filing for Chapter 7 personal bankruptcy will not just affect you. Think about the effect it will have on business associates, friends and family or anyone else who may be a co-signer with you. When filing Chapter 7, you are not longer liable for the debts that you and a co-debtor signed for. This does not dissolve any co-signers of the debt, and your creditors will continue to try and collect from them.
It is possible to get an auto loan or mortgage during the repayment period for Chapter 13 bankruptcy. It’s a bit more difficult, though. You will be required to meet a trustee and be approved for a new loan. Create a budget and prove you can afford a new loan payment. It will also be necessary to show why a new purchase needs to be made.
Filing Bankruptcy
Do not wait until things go from bad to worse before filing bankruptcy. Many people simply try to ignore their financial troubles, hoping that they will somehow go away, but this is a huge mistake. Debts can multiply very quickly, and can result in you losing money to wage garnishment, or even losing assets that are part of a secured loan. Consider all possible options before filing bankruptcy.
Understand the rules and laws before submitting your petition for bankruptcy. Your case may be rife with issues due to pitfalls inherent in codes regarding personal bankruptcy. There are mistakes that may cause the dismissal of your case. Make sure you check into your case and see that you have the paperwork filled out correctly. The proceedings will be much smoother with this information.
Clearly, significant resources and assistance can be had by anyone contemplating personal bankruptcy. Always remember that people who become informed before going through the motions do much better with everything involved. Take your time to read and to understand these tips before implementing them and using them to your advantage.
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