Filing personal bankruptcy is a somewhat complex process. There is not simply one type of bankruptcy, so the choice you make will be determined by your debts and what finances you have. Know as much as you can before you file. The following tips can help you get started.
Don’t pay tax requirements with your credit cards with the thought of starting the bankruptcy process afterward, without doing your research first. In most states, this is not dischargeable debt. Therefore, you will end up owing the IRS a lot of money. A common rule is that dischargeable tax means dischargeable debt. It is pointless to use credit cards if they can be discharged.
After a bankruptcy, you may still see problems getting any kind of unsecured credit. If you are in this situation, applying for a secured card may be the answer. This will show people that you are serious about getting your credit record back in order. After using a secured card for a certain amount of time, you might be offered an unsecured card once again.
Prior to filing for bankruptcy, research which assets will remain exempt from creditors. The Bankruptcy Code lists assets considered exempt from being affected by bankruptcy. It is crucial to read the list before you file for bankruptcy so you know whether your favorite items will be taken. Without reading the list, you may be shocked at which possessions can be taken from you.
Do some research to find out more about Chapter 13 and Chapter 7. If you file for Chapter 7 bankruptcy, all of your debts will be eliminated. Any debts that you owe to creditors will be wiped clean. In a Chapter 13, though, you’ll be put on a payment plan for up to 60 months before being free of your debts. Look into both types of bankruptcy before deciding which one would suit your particular needs.
Learn and gain a firm grasp of the differences in applying for Chapter 7 bankruptcies versus Chapter 13 bankruptcies. Get a good grasp of the pluses and minuses each type of filing involves by researching both of them extensively. Go to a specialized lawyer to ask your questions and get some useful advice on what to do.
Ensure that you bankruptcy is your best choice. Consolidation could be the avenue you need to get your finances back in order. It is not a quick and easy process to file for bankruptcy. The future of your credit will be greatly affected. 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.
Don’t file bankruptcy if you can afford to pay your debts. Understand that while declaring bankruptcy will eliminate many of your debts, you will have difficulty obtaining credit and will pay more in interest for the credit you do receive for at least seven years.
Before declaring bankruptcy, see if there’s anything less drastic you can do to repair your credit. You may qualify for alternatives such as debt repayment plans or interest rate reductions. Ask your bankruptcy attorney about these options. If you are about to lose your house, talk to your lender about a loan modification. There are a lot of ways that your lender can assist you, such as reducing interest rates, eliminating late fees, or extending the term of your loan. Remember that creditors desire to get paid and usually debt repayments are often preferable when dealing with bankrupt debtors.
Do not wait until things go from bad to worse before filing bankruptcy. It is a mistake to ignore your financial troubles, hoping they will go away on their own. Debts can get out of control fast. If you’re not taking care of these debts, you may be getting into trouble like wage garnishment. As soon as you find yourself experiencing financial problems, take action and discuss your options with a bankruptcy attorney.
Before filing for bankruptcy, you must be educated on the specifics of all bankruptcy laws. You need to know certain things, like the fact that it’s illegal to transfer any asserts 12 months before filing your claim. Also, it is against the law for a person to acquire more debt on their credit card prior to filing.
Exhaust all other option prior to filing personal bankruptcy. Consider credit counseling. A number of non-profit companies can assist you. They will work with your creditors to get your payments lowered and your interest lowered as wll. You make your monthly payments to the credit counselors, and they pay the money to each creditor.
Do not take a large cash advance from credit cards prior to filing, knowing that bankruptcy erases all debts. If a creditor notices that activity they can constitute it as fraud and sue to have you pay it all back even after your bankruptcy is complete.
Do not take too long deciding that it is time to declare bankruptcy. Yes, it is hard to admit that you need help; however, the longer you wait the deeper in debt you get. Speaking with a professional in a timely manner will allow you to receive sound advice that can help you before things get out of hand.
Know that ultimately, bankruptcy could get you a higher credit score than to keep making late payments or missing payments altogether. The good news here is that, even though the bankruptcy claim will leave a decade-long stain on your credit score, you can still work to repair your credit. One of the good things about bankruptcy is that you can start fresh.
You likely now understand that bankruptcy is something that should be undertaken carefully and with great deliberation. If you think it is the right choice for you, find a lawyer that can properly guide you through the process and give you a new leash on life.