Nowadays, many people have racked up huge amounts of debt. They are harassed by collection calls and creditors all while the bills keep piling up. If you find yourself in this type of financial trouble, you may want to think about filing for bankruptcy. Read this article to determine if this is the right approach for you.
Don’t use credit cards to pay your taxes if you’re going to file bankruptcy. In many parts of the country, you cannot get this debt discharged, and in the end you will be left owing the IRS a big sum of money. In most cases, you can use the adage that “a dischargeable tax is a dischargeable debt.” Therefore, you should not pull your credit card out for purchases if it is just going to be discharged during the bankruptcy.
Make sure you’ve exhausted all other options prior to declaring bankruptcy. It is possible to take advantage of other options, like consumer credit counseling. Before you take the drastic move of filling for bankruptcy and living with a long lasting bad credit history, make sure to consider using another way that may not be as damaging to your credit.
Chapter 13
Make sure that you understand the difference between Chapter 13 bankruptcy and Chapter 7 bankruptcy. If you file using Chapter 7 bankruptcy, you will get all your debts eliminated. All happenings with creditors will disappear. Filing Chapter 13 differs by requiring you to agree to a 60 month plan to repay your debts before they are totally eliminated. Both options have advantages and drawbacks, so do your research before deciding.
Learn how Chapter 7 bankruptcy and Chapter 13 bankruptcy differ from each other. Go to a reputable website and research the benefits and detriments of each type of bankruptcy. If you do not understand what you are reading, talk to your attorney before making that serious decision.
Don’t file for bankruptcy if it is not completely necessary. Many times a consolidation loan will ease your financial struggles. Filing a claim can take a long time and cause much stress. It will affect your access to credit in the future. So, consider bankruptcy only as a last resort when you have no other choice.
Consider filing a Chapter 13 bankruptcy. If you owe an amount under $250,000 and have a consistent income source, Chapter 13 may be right for you. This lets you keep any real estate and personal property while you repay all your debts through a consolidation program. The window for Chapter 13 repayments is typically 3-5 years. At the end of this time, any unsecured debt is discharged. Bear in mind that if you miss a single payment that is due under your plan, the entire case will be dismissed by the Court.
Do not forget to enjoy life a little once you get through the initial filing process. 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 cause depression, if you don’t take care to avoid it. Once your petition is in the hands of the judge, all you can do is wait.
Even if you are involved with Chapter 13 bankruptcy, it is still possible to get a mortgage or an automobile loan. This is harder. You will need to secure the trustee’s approval for any new debt obligation. You will need to come up with a budget and show that this new loan payment schedule is doable. You also have to prepare yourself to explain the reasons you need to buy the item.
Timing is everything. When it comes to filing for personal bankruptcy, timing is vital. In some cases, you should file for bankruptcy right away, but in others, there may be reasons why filing quickly would be a bad idea. Discuss your particular situation with your bankruptcy attorney to determine the best time to file.
Bankruptcy can cause anxiety and a host of other physical and emotional issues. Look for a good attorney who can help you through the process. Don’t think that the highest priced attorney is the best. You do need someone who is costly, just someone who is good at what they do. Speak with trusted people, check the BBB and take advantage of the free bankruptcy attorney consultations. You could even attend a court hearing to see how an attorney handles his case.
If you are planning to file bankruptcy, avoid taking large cash advances from credit cards thinking that the debt will be erased. This is illegal. It’s fraud, and you can still be responsible for paying it back even after declaring bankruptcy.
Don’t drag your feet figuring out if bankruptcy is the right thing to do. Yes, it is hard to admit that you need help; however, the longer you wait the deeper in debt you get. Going to a lawyer as soon as you can is the best to remain in control of your situation.
Credit Report
Once your bankruptcy is over, request a copy of your credit report from all of the credit reporting bureaus. Be sure to check your credit report for accuracy of closed accounts and discharged debts. If there are any errors, make sure that you take action to resolve them as soon as possible.
Include any and all debts you need eliminated in your paperwork. If you forget to include any of your debts in the filing, you lose the chance to discharge them. It is up to you to ensure all things that need to be taken care of are written down, otherwise you will be stuck paying on things that weren’t discharged.
You have undoubtedly gleaned from the text above that bankruptcy doesn’t have to be a difficult process as long as you’re informed. Tackling this in a logical and emotionless manner will relieve you of your debt issues while giving you a fresh start for the future.
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