Filing for personal bankruptcy protection is an important strategy for people that have had assets, such as their vehicle, seized by the IRS. Your credibility with lenders will take a beating, but sometimes bankruptcy is the only thing you can do. Continue reading for more information about how and why to file for bankruptcy.
When people owe more than what can pay, they have the option of filing for bankruptcy. If this sounds familiar, you should read up on the bankruptcy laws in your state. Each state has their own bankruptcy laws. For instance, in some states, you can’t lose your home to bankruptcy, while in other states, you can. You should be familiar with the laws for your state before filing for bankruptcy.
Do not use a credit card to pay income taxes and then file for bankruptcy. Generally, this type of debt is not covered by bankruptcy filing, and you will still have a large debt owing to the IRS. Transferring the debt to another medium (e.g. a credit card) won’t magically make a tax debt discharagable, either. If you live in an area where tax can be discharged through bankruptcy, financing your tax bill is pretty pointless.
Before filling for bankruptcy, determine which assets will be exempted from seizure. The federal statutes covering bankruptcy can tell you exactly which assets are exempt from forfeiture to pay off creditors. Make sure that you review this list before you decide to file, to see if you can hang on to your most important possessions. Without reading the list, you may be shocked at which possessions can be taken from you.
Do some research about laws and legislation before filing. Laws are ever-evolving. You must stay current with bankruptcy laws if you want to be successful in your challenge. To learn about the changes, you should check out the website of your state’s legislation or you can call their office.
A free consultation is standard for bankruptcy attorneys, so shop around before settling on one. Always ensure that the person you meet with is a real lawyer, not a legal assistant or paralegal. These people can’t give legal advice. Seeking out different attorneys is all part of the process until you find someone that you can trust.
Be sure you know what the difference between Chapter 13 and Chapter 7 bankruptcy is. There is a wealth of information online about each type of bankruptcy and their respective pluses and minuses. If you are confused by what you find, be sure to ask your attorney to explain anything that is unclear before you make your decision about filing.
It is imperative that you know for sure that bankruptcy is the option you need. You may find consolidating your debt may be simpler. It can be quite stressful to undergo the lengthy process of filing for personal bankruptcy. It will have a long-lasting effect of your future credit opportunities. Because of this, you should be sure that bankruptcy is your only option before you file.
Once you have completed the bankruptcy filing, you should take time to do something you enjoy. It’s easy to be stressed during this time. It is essential to cope with this stress well, to prevent becoming depressed. You are getting a fresh start, and things will get better.
If you are in the midst of a Chapter 13 bankruptcy, it is possible to apply for certain loans. However, it will be a longer and more arduous task. Your bankruptcy custodian will need to approve the loan. When meeting with the trustee, bring a budget which shows that you will be able to afford the payment on the loan you are trying to get. Also, be sure you can provide an explanation as to why this purchase is necessary.
As was stated before, the option of filing for personal bankruptcy should be kept open. However, it has detrimental effects on your credit, so this should not be your first choice A person who becomes well informed in regard to personal bankruptcy will avoid a great deal of stress and will be better prepared to defend valuable belongings from seizure.