Bankruptcy is a huge financial decision that should be considered carefully before undertaking. Learn everything you can beforehand.
Make certain that you comprehend everything regarding personal bankruptcy by studying online. The United States Department of Justice and American Bankruptcy Institute are both sites that provide free advice. The more knowledge you have, the more you are able to make right decisions and find a new future.
Credit Card
Don’t use a credit card to pay your taxes before filing for bankruptcy.In most states, this debt will not be dischargeable, and in the end you will be left owing the IRS a big sum of money. This means using a credit card is not necessary, since bankruptcy will discharge it.
Before filling for bankruptcy, determine which assets will be exempted from seizure. To find an itemized list detailing assets exempt from bankruptcy, find the Bankruptcy Code. Prior to filing for bankruptcy, it is critical that you go over this list, so that you know if you can expect any of your most valuable possessions to be seized. You may find yourself unpleasantly surprised when the things you value the most are taken from you without warning. This is why it is very important the familiarize yourself with this list.
You might experience trouble receiving any unsecured credit after filing for bankruptcy. If you are in this situation, think about applying for a couple of secured credit cards. This will show people that you’re serious when it comes to having your credit record back in order. After using a secured card for a certain amount of time, you are going to be able to have unsecured credit cards too.
The Bankruptcy Code has lists assets considered exempt from being affected by bankruptcy. If you fail to do so, you might be blindsided when a possession that is important to you is taken to repay creditors.
If you are going to be filing for bankruptcy, think about filing Chapter 13. If you owe an amount under $250,000 and have a consistent income source, Chapter 13 may be right for you. That way, you can hold onto your personal assets and pay back a portion of your debts pursuant to an approved plan. The length of the plan is generally up to five years, and when this is over, you will be free of unsecured debt. Just ensure that you take necessary precautions, as missing one payment can result in the court dismissing your case.
The person you choose to file with needs to know both the good and accurate picture of your financial condition.
Chapter 7
Make sure the time is right when you file a bankruptcy claim. Timing is everything, especially in personal bankruptcy filings. Sometimes it is the best option to file quickly, whereas in other situations filing should be put off until the worst has already passed. Discuss the strategic timing of your bankruptcy with your attorney.
Be certain that you know how Chapter 7 and Chapter 13 differ. Chapter 7 bankruptcy completely wipes out all outstanding debts. All of your financial ties to the things that tie you to creditors will go away. Chapter 13 bankruptcy though will make you work out a payment plan to eliminate all your debts.
Understand the differences between a Chapter 7 and a Chapter 13 bankruptcy. Take the time to learn about them extensively, and look at the advantages and disadvantages of each.If you have trouble understanding the wealth of information, be sure to ask your attorney to explain anything that is unclear before you make your decision about filing.
Don’t take out big cash advances from any of your credit cards prior to filing for bankruptcy, taking advantage of the fact that those debts will later be erased. This fraudulent practice is a demonstration of bad faith. Debts you incur this way will likely not be discharged in a bankruptcy, and you will still have to repay them.
Don’t file for bankruptcy the income that you can afford to pay your debts. While filing may seem simple and a way to get out of paying your debts, it is a stain that will remain on your credit report for seven to ten years.
This stress may lead to something worse like depression, especially if you are not making any efforts to adopt a positive attitude. Life will get better after you finish this process.
Be sure to take care in choosing a lawyer to handle your personal bankruptcy case. Because of the increase in bankruptcy filings, this field attracts a lot of newer, inexperienced attorneys. Before hiring a lawyer, make sure he or she is licensed and experienced. If you want to check for a proper lawyer, you can use the Internet, ask your friends, or look for a popular lawyer via the Yellow Pages. The idea is that you want to ensure your lawyer’s competency on the issue.
Bankruptcy can cause anxiety and a host of stress. To combat these problems, hire a good lawyer. Do not hire based solely on cost. It is not be necessary to hire a costly attorney; just make sure he or she is qualified to handle your case. Make sure people who have experienced bankruptcy give your circle of friends and the BBB. You might want to visit a court hearing to see how an attorney handles his case.
Be careful on how you are planning to pay your debts before you file for bankruptcy. Bankruptcy laws generally don’t cover situations which occurred within a short time frame prior to filing, a period that is extended to one year when it comes to payments made to family members.Read up on the rules before making financial decisions.
A great personal bankruptcy tip is to reconsider getting a divorce, if you’re finding yourself in a tough financial situation. Divorcing will only complicate your financial situation. You may find that both you and your spouse must file for bankruptcy following divorce. Reconsidering divorce can be a very smart option.
Once your bankruptcy has been complete for a month or two, contact the three major credit reporting agencies and request copies of your report. Check to make sure your reports accurately reflects your closed accounts and discharged debts.
You should know by now that bankruptcy does not just pop up out of nowhere. Many issues need to be handled the right way. Hopefully, with what you learned today, you learned what it means to file for bankruptcy and you can avoid being in this situation in the future.
Make sure accuracy is spot on. Realize that mistakes can occur at any point in the process and the accuracy of the information is your responsibility. Remember that the lawyer has a lot of cases, so details may be remembered or might have to be mentioned again. Therefore, you should double-check all of their forms and ask questions about anything that seems off to you.