Whatever led you to declare bankruptcy is probably very sad, but that doesn’t mean that you can’t have a better life after bankruptcy. The point of bankruptcy is to have a clean slate and a fresh start. Read on for how to make the bankruptcy process be a rebirth instead of financial Armageddon.
Once a person’s debts outstrip his or her ability to repay them, bankruptcy may be the only option left. If you’re in this situation, learn about the laws where you live. Each state has its own set of rules regarding bankruptcy. In certain states if you file for bankruptcy your home remains protected, but the laws vary depending on where you reside. It is important to understand the laws in your state before filing for bankruptcy.
Do not try to get clever by paying your taxes via credit card before you declare bankruptcy in an effort to dodge your tax burden. Most of the time, you cannot discharge this debt. As a result, you will owe the IRS a lot of money. Generally speaking, debt incurred to pay taxes and the tax bills themselves are treated the same in a bankruptcy. So, there’s no reason to make use of a credit cards if it will not be discharged in bankruptcy.
Chapter 13 Bankruptcy
Consider filing using chapter 13 bankruptcy. You are eligible for filing bankruptcy under Chapter 13 if you work and owe less than $250,000. Chapter 13 bankruptcy permits you to remain the owner of your properties, while allowing you to repay your debt using a debt consolidation loan. Lasting anywhere from three to five years, this plan will allow you to be discharged from unsecured debt. Stay mindful that should you for any reason miss even one plan payment, your whole case is going to get thrown out by the court system.
If your paycheck is larger than your debts, avoid filing for bankruptcy. Though bankruptcy may appear to be a good way to escape your debts, it does affect your credit negatively for a fairly long time.
Never forget that you still deserve to enjoy life while you go through the bankruptcy process. Many people who undergo this process become way too stressed out. If you let the stress get to you you may get depressed if you’re not doing the proper things to fight it. Life will get better; you just need to make it through the bankruptcy process.
If keeping your vehicle is of great concern, ask your lawyer if you can secure a payment modification. Filing under Chapter 7 is usually a good way to lower your payments. You must have bought the car 910 or more days before you filed, the loan must have a high interest rate, and you have to have a secure and steady working history in order for that to work.
It is possible to obtain new vehicle and home loans while a Chapter 13 case remains active. It is just tougher. First, your trustee will have to approve the loan. Create a budget and prove that you will be able to afford it. You will always have to let them know why this item needs to be purchased.
Make sure you understand your rights as you file for bankruptcy. Occasionally, debt collectors will attempt to convince you that your debt isn’t eligible for bankruptcy. You should know that only a few debts cannot be erased, including student loans and child support. If you are speaking to debt collectors about another type of debt and they tell you it cannot be discharged, check your local regulations. You can report the collectors to your state attorney general if they are lying about this.
Do not use the word “shame”, if you go bankrupt. The bankruptcy process can make many people feel ashamed, guilty and unworthy. These sorts of feelings are not helpful to you. Indeed, they may cause you mental anguish. Staying positive and upbeat is the proper way to deal with bankruptcy.
Know the bankruptcy code backwards and forwards before filing. You need to know certain things, like the fact that it’s illegal to transfer any asserts 12 months before filing your claim. It’s also prohibted to run up debt on credit cards just prior to filing.
Be certain to be transparent about all of your financial information when the filing of for personal bankruptcy. If you do not complete your financial profile your case could be delayed or dismissed. No sum is too small to be included; err on the side of caution and include everything. This includes any jobs you have on the side, any vehicles you have and any outstanding loans.
As stated earlier, anything that leads someone to bankruptcy is not a good story. However, the story that gets written after bankruptcy does not have to be depressing too. In fact, if you apply the ideas and advice given in this article, you can truly make bankruptcy a turning point in your life towards better days.