When debt begins to pile up, even the most responsible among us can panic and quickly lose control of the situation. In severe cases, a small amount of debt can become overwhelming in a relatively short period of time. When you find yourself in such a position, it can be hard to know what to do. In the article below, you will learn a few great tips on how you can handle this mounting debt by filing a bankruptcy claim.
Do not use a credit card to pay income taxes and then file for bankruptcy. Most of the time, you cannot discharge this debt. As a result, you will owe the IRS a lot of money. A common rule is that dischargeable tax means dischargeable debt. So as you can see, in this situation there is no need to use the card when the debt will be discharged when you file for bankruptcy.
Credit History
Think through your decision to file for bankruptcy carefully before going ahead with it. Look into credit counseling to see if it could help you work out of your debt without bankruptcy. Bankruptcy is a serious negative on your credit history so make sure you have no other options before you file. It is important to keep your credit history as positive as possible.
If you are faced with the choice of filing for bankruptcy or using your emergency fund or retirement accounts to pay creditors, opt to file for bankruptcy. No matter what you do, do not touch your personal savings unless there is no other option. While you may have to use a part of your savings, never completely wipe it out which would only leave you in worse financial shape in the future.
Unsecured Credit
You might find it difficult to obtain an unsecured credit card or line after emerging from bankruptcy. Look into getting a secured credit card in order to get back on your feet with building credit. This will show people that you are serious about getting your credit record back in order. Once you’ve built up a history of on-time payments, you may start getting unsecured credit again.
Use a personally recommended bankruptcy attorney instead of one found through the Internet or phone books. There are lots of unsavory companies and lawyers out there who prey on people who are in desperate straits. It is up to you to find someone that is trustworthy and can make the process go smoothly.
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. It is important that you read this list before filing for bankruptcy, so that can find out whether or not your most prized possessions will be seized. Failure to do this could cause some ugly surprises down the road when you discover that your valuables must be seized.
Find a bankruptcy attorney who offers free consultations, and ask lots of questions. Most lawyers will meet with you for free and give you helpful advice, so meet with several. Decide which lawyer you like best buy reviewing all of the lawyers’ answers to your questions. Choose the lawyer who addressed your issues the best. It’s isn’t necessary to make a choice right away. So you have sufficient time to speak with a number of lawyers.
Bankruptcy is tricky and hiring a good lawyer will be a must. You might not understand all of the various aspects to filing for bankruptcy. A qualified bankruptcy attorney will guide you through the steps and help you do everything properly.
Once your bankruptcy filing is under way, take the time to decompress a little. Filing for personal bankruptcy can be very stressful for the debtor. This stress could actually cause depression, if you don’t combat it. Remember that your situation is going to improve after you file for bankruptcy.
Find out about lowering the cost of the payment you pay monthly on your car, if you are afraid of losing it. A lot of the time you can lower payments by filing for Chapter 7 bankruptcy. If you meet the criteria specific to your state, it may be a good option to consider.
It is possible to obtain new vehicle and home loans while a Chapter 13 case remains active. However, it will be a longer and more arduous task. Normally, the trustee assigned to your bankruptcy must approve any new loan. Create a budget and prove that you will be able to afford it. You will need to be able to explain why the purchase is necessary.
If you have to file for bankruptcy, ensure that you supply all your financial information. Neglecting to include the smallest of detail can lead to a petition being dismissed. It is better to have something on there that you are unsure about, rather than not include it at all and risk a dismissal. When it comes to the types of things you might not be thinking about adding, just think about any automobiles you have, any money under the table you’re making, etc.
When your financial situation starts to get really ugly, it can be easy to feel like you need help. Yet, you can take better control of your future and plan out how you are going to secure your finances, for life. Apply the advice from this article and you will be on your way to realizing financial freedom.
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