If you were unfortunate enough to have your property repossessed by the tax man, you should probably consider bankruptcy. Although bankruptcy tends to destroy a person’s credit, it’s occasionally the only available option. Continue reading for more information about how and why to file for bankruptcy.
If you are considering paying your taxes with credit cards and turning around and filing bankruptcy–they are on to you. In a lot of places, the debt cannot be discharged, and you may still owe money to the IRS. The rule here is that if you can get the tax discharged then you can get the debt discharged. So it does not help you to put the tax bill on your charge card if you know the debt will be discharged anyway.
Keep working to improve your situation. You can often have property returned to you. Autos, jewelry and even electronics that have been repossessed, could be returned. If it has been 90 days or less between the repossession of your property and your filing, you might be able to get your property back. A qualified bankruptcy attorney can walk you through the petition process.
Before you file, make sure you understand current bankruptcy laws. This area of law is in constant flux and it is imperative that you know where the law stands at the time you file for your bankruptcy. To stay up-to-date on these laws, check out your state’s government website.
Always protect your house. Filing for bankruptcy doesn’t automatically involve losing your home. Check your home’s current value to see if it has gained equity and get your first and second mortgage papers together. Otherwise, look into the homestead exemption which may allow you to stay in your home if you meet financial threshold requirements.
Before you file for bankruptcy, make sure you absolutely need to. You might be better off consolidating your debt or availing yourself of some other remedy. Filing a claim can take a long time and cause much stress. In addition to the stress associated with bankruptcy, you will also have to deal with severely restricted credit in the future. This is why you must ensure that bankruptcy is the only option left for you.
Spend time with loved ones. The process of bankruptcy can seem brutal. It is extremely stressful and long, and it can leave you feeling ashamed of yourself. There are a number of people who wish to go into seclusion while undergoing the process of personal bankruptcy. However, becoming a hermit will only increase feelings of self-doubt and could make you depressed. Make it a point to catch yourself if you feel yourself pulling away from others. Tell others that you would like to do some enjoyable things together while you go through bankruptcy process, then do it.
Don’t file bankruptcy if you can afford to pay your debts. Bankruptcy may appear like the easier way to avoid paying your old bills, but it is a huge mark on your credit score and remains there for up to 10 years.
Chapter 7 Bankruptcy
Before you decide to file for Chapter 7 bankruptcy, you should consider what your bankruptcy might have on others, as your family and friends may be affected. 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. Although, your creditors may insist that the co-debtor pay off the entire debt.
Bankruptcy is a challenging time and can create a huge amount of mental and emotional stress. The best way to lessen this stress is to employ a lawyer, who can handle most of it for you. Don’t skimp when hiring a good lawyer. You don’t have to use the most expensive attorney; you just need a good quality attorney. Get referrals from people you know who have been in your situation, check with the better business bureau and use free consultations to interview several people. You could even attend a court hearing to see how an attorney handles his case.
Finding out about your personal bankruptcy options is the difference between a successful and an unsuccessful claim. However, it has detrimental effects on your credit, so this should not be your first choice Protect your assets and avoid even more stress by learning as much as you can before you decide to file.