Filing for bankruptcy is a somewhat complex process. There are different kinds of bankruptcy you can file, and the one that best fits you will depend on your financial situation and what you owe. This article will give you in the right direction.
If you are thinking about paying off your tax obligations with a credit card and then filing bankruptcy, think again. Most states do not look at this debt as chargeable, and you could end up owing money to the IRS. Generally speaking, debt incurred to pay taxes and the tax bills themselves are treated the same in a bankruptcy. Therefore, you should not pull your credit card out for purchases if it is just going to be discharged during the bankruptcy.
Do not use a credit card to pay income taxes and then file bankruptcy. In a lot of places, this debt will not be dischargeable, and you could be left owing a significant amount to the IRS. This makes using a credit care irrelevant, when it will just be discharged.
You have other options available like consumer credit that consumers can use. Bankruptcy is a permanent part of your credit, so before you make such a big decision, you want to exhaust all other options so that the future effects on your credit history are as minimal as possible.
Try to make certain you are making the right choice prior to filing your petition. Consider any other options that are available to you, such as consumer credit counseling. Bankruptcy is a permanent part of your credit, so before you make such a big decision, you might want to explore all other choices so that your credit history is affected as minimally as possible.
You should not use your retirement savings unless there is nothing else you can do. You may have withdraw from your savings every now and then, but don’t take everything that is there as you will be bereft of any financial backup if you do.
Don’t pay for an attorney consultation with a lawyer who practices bankruptcy law; ask a lot of questions. Most attorneys offer free initial consultations, so consult with a few before settling on one. Only make a decision after you feel like your concerns and questions were answered. It is not necessary to make a final decision immediately following the meeting. This allows you time to interview several attorneys.
It’s not uncommon to learn soon after bankruptcy that you are unable to get an unsecured credit card easily. A great way to rebuild your credit is to apply for a prepaid credit card. When you do this, it shows your determination to fix your credit history. If you do well with a secured card and make strides to repair your credit, you will ultimately be able to receive an unsecured card.
Be certain you talk to the lawyer, himself, since they cannot give legal advice.
Chapter 13
Before declaring bankruptcy, ensure that all other options have been considered. There are numerous programs out there that may assist you with your debt, like a credit counseling program, a nonprofit group, government assistance, etc. Some creditors will work with you to help you pay off your debt with lower interest rates, lower late fees, or an extended loan period.
Consider if Chapter 13 bankruptcy for your filing. If you are receiving money on a regular basis and your unsecured debt is under $250,000, Chapter 13 will be available to you. This plan normally lasts from three to five years, your unsecured debt will be discharged. Keep in mind that even missing one payment can be enough for your case.
Going through bankruptcy is never easy. Many people tend to hide until the process is completed. This is not a good idea because staying alone could cause you to feel depressed. So, it is critical that you keep spending time with the ones you love, you should still be around those you love.
You may have heard bankruptcy referred to differently, either as Chapter 7 or Chapter 13. Learn the differences between the two before filing. Under Chapter 7 type bankruptcy, all debts are forgiven. All of your financial ties to the people you owe money to will disappear. Bankruptcy under the rules of Chapter 13, on the other hand, require you to work out a payment arrangement to pay back the agreed upon amounts. It is vital that you know the differences between these types of bankruptcies, in order to find the option that’s best for you.
Before you choose Chapter 7 bankruptcy, consider how it could affect other people on your credit accounts, which are usually close relatives and friends. However, anyone sharing the loan with you may be forced to pay back the entire amount for the amount in full, they will be required to pay the debt.
It is not uncommon for bankruptcies to elicit feelings of guilt, guilty or ashamed. These feelings can cause you to make rash decisions and provide no value.
Protect your house. Filing for bankruptcy does not mean you have to lose your home. Depending on if your home’s value has gone down or if it has a second mortgage, you might be able to keep it. You can also investigate your state’s homestead exemption, an option that might enable you to keep your home if certain financial requirements are met.
Bankruptcy is a difficult time that always leads to lots of other physical and emotional issues. To combat these problems, find a highly qualified attorney. Don’t let cost be the cheapest. It is not necessary to hire a costly attorney; just make sure he or she is qualified to handle your case. Make sure people in your circle of friends and the BBB. You could even attend a court hearing and observe lawyers handling their cases.
Consider all of your options available before filing for bankruptcy. You might want to consider credit counseling instead. There are even non-profit organizations that may be able to help you. They can work with your creditors to get your payments and interest. You make payments to them and they pay your creditors through them.
Speak with an attorney about any fears you have about losing your car. You may even be able to get your monthly payment reduced. Lower payments can sometimes be structured into a Chapter 7 solution. There are qualifications, such as the loan being high interest and a good work record for this option.
Now you can probably see that filing bankruptcy is a decision that is best thought out carefully before pursuing. Ultimately, if bankruptcy seems like the best choice for you and your finances, you may want to seek out a bankruptcy attorney. They’ll be able to guide you through the stages of bankruptcy, ensuring your fresh start is a great one.