It can be very complicated to file for personal bankruptcy. There are different types of bankruptcy, and the type that you choose depends upon your personal finances and the nature of your debts. That’s why you should research personal bankruptcy prior to deciding whether or not you should file. The following tips can help you get started.
Don’t use credit cards to pay your taxes if you’re going to file bankruptcy. Most of the time, you won’t be able to discharge this debt, and you could make things worse with the IRS. If the tax can be discharged, so can the debt. If you live in an area where tax can be discharged through bankruptcy, financing your tax bill is pretty pointless.
Instead of jumping into a bankruptcy filing, be sure your situation requires it. You have other choices, including consumer credit counseling. Bankruptcy leaves a permanent mark on your credit history, so before you take such a large step, you want to exhaust all other options so that the future effects on your credit history are as minimal as possible.
If you suspect that bankruptcy filing may be a reality, don’t try to discharge all your debt in advance by emptying your retirement or saving accounts. You should never touch your retirement accounts, unless you have absolutely no choice. Although it is quite normal to use some of your savings, ensure that you leave enough in your account for emergencies.
Stay abreast of new laws that may affect your bankruptcy if you decide to file. Bankruptcy law evolves constantly, and it’s important to stay up-to-date to ensure that you file properly. To learn how the law has changed recently, go online and check your state’s website, or call the state government and ask them.
Be certain to grasp the distinction between Chapter 7 and Chapter 13 bankruptcy cases. Chapter 7 eliminates all debts. The ties with the creditor will be broken. Filing Chapter 13 differs by requiring you to agree to a 60 month plan to repay your debts before they are totally eliminated. It is worth while to take your time to research both types of bankruptcy to decide which option works best for you, and your financial situation.
Take steps to ensure your home is protected. Bankruptcy doesn’t always mean you’ll lose your home. It is entirely possible that you will be able to keep your home. This is dependent upon the your home’s value and whether or not you have taken a second mortgage. 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.
Learn about teh differences between Chapter 13 and Chapter 7 bankruptcy. Take the time to find out about each one online, and look at the advantages and disadvantages of each. 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.
Learn what you can about Chapter 13 bankruptcies. If you are receiving money on a regular basis and your unsecured debt is under $250,000, you may be able to file Chapter 13 bankruptcy. You can secure your home under Chapter 13 and pay your debts with a payment plan. These kinds of plans usually range across 3, 4 and 5 years. Once this is done, all your unsecured debt will get discharged. Just know that missing one payment could cause your case to be dismissed.
Now you know that filing for bankruptcy requires a lot of thought. 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.