Filing for bankruptcy is not a simple process. All types of bankruptcy exist. The kind that you select depends on your finances and your debt. You should learn all you can about bankruptcy before filing. The advice in this article can be a good starting point for you.
Do not even think about paying your taxes with credit and petitioning for bankruptcy right after. Most states do not look at this debt as chargeable, and you could end up owing money to the IRS. The main thing to remember is that dischargeable taxes are the equivalent of dischargeable debts. Thus, it doesn’t make sense to use a credit card when it is going to be discharged when you file for bankruptcy.
If you are faced with the choice of filing for bankruptcy or using your emergency fund or retirement accounts to pay creditors, opt to file for bankruptcy. No matter what you do, do not touch your personal savings unless there is no other option. Your savings accounts offer valuable financial security so try to leave them intact.
Be sure to weigh all of your options before deciding to file for personal bankruptcy. For example, consumer credit counseling services can often help you figure out a workable repayment plan with creditors. You might also be able to negotiate lower payments yourself, but make sure that you get written records of any debt modifications to which you agree.
Chapter 13 Bankruptcy
Find out if you can use Chapter 13 bankruptcy, as it may help you better than the other laws. With a consistent income source and less than $250k in debt, try filing for Chapter 13. Chapter 13 bankruptcy permits you to remain the owner of your properties, while allowing you to repay your debt using a debt consolidation loan. It usually takes three to five years to fulfill this plan. When the time is up, you’re unsecured debts will be discharged. Remember that if you even miss one payment that’s due under this plan, the court could dismiss the whole case.
Investigate other alternatives before resorting to bankruptcy. Consult with a bankruptcy attorney to see if an interest rate reduction or debt repayment plan is an alternative to filing for bankruptcy. If foreclosure looms, think about getting your loan plan modified. This type of plan allows your lender to work with you eliminating charges, extending your loan, and lowering interest rates to help you pay back the loan without drowning in debt. When all is said and done the creditors just want their money, and more often than not will work with you on a repayment plan.
Before you choose Chapter 7 bankruptcy, think about what effect that is going to have on any co-signers you have, which are usually close relatives and friends. Once you file for Chapter 7 bankruptcy protection, you no longer have legal responsibility for debts that you and any co-signers originally agreed to. However, if you had a co-debtor, they will be required to pay the debt.
Look at bankruptcy as a chance to mature and take responsibility for your personal finances. This process is less that glamorous, and it makes most people lose their self-esteem. Do not let these negative feelings influence your decision. Keep a positive state of mind to deal with your tough financial situation.
Filing for bankruptcy can cause stress. One way to help reduce is this stress is to hire a reliable attorney. Don’t think that the highest priced attorney is the best. Think about quality rather than cost when hiring an attorney. Ask for referrals from folks who have filed and check reputations with the BBB. When looking at bankruptcy attorneys, consider sitting in on one of their court hearings to find out how they handle the case.
Under no circumstances should you take out a huge cash advance on any of your open credit cards before filing for bankruptcy. This is against the law and it is fraud. After the bankruptcy process you can be made to pay it all back to the creditor.
Include all of your debts that you wish to be erased on the bankruptcy filing papers. If you fail to list a debt, it may not make it into your discharge. Be certain to list all of your debts so that none that could have been discharged will be overlooked.
This article has hopefully made it clear that declaring bankruptcy is a big decision that should be considered at length. If you feel that it is best for you to file for bankruptcy, a qualified attorney can be of great assistance, ensuring you make the best choices.