It can be challenging to face the prospect of bankruptcy. If you are thousands of dollars in debt, you may not have many options. However, even if you have a poor credit score, you can still live your life and get some of the things you are looking for, like a car or a home.
Do not attempt to pay your taxes with your credit cards and subsequently file for bankruptcy. You will find few states that discharge this kind of debt. You may also wind up owing a lot of money to the IRS. In most cases, you can use the adage that “a dischargeable tax is a dischargeable debt.” It is pointless to use credit cards if they can be discharged.
Before you file for bankruptcy, carefully consider if it is the right option for you. You have other options, including consumer credit counseling help. Be sure to consider all options before filing for personal bankruptcy, as this will take a large toll on your credit score for the next ten years.
When you realize that you probably will file for bankruptcy, do not pay your creditors or try to avoid bankruptcy by spending all of your regular or retirement savings. Unless there are no other options, your retirement funds should never be touched. Although you may need to tap into your savings, you should not use up all of it right now and jeopardize the financial security of your future.
It is essential when going through bankruptcy that all of your income and assets are reported openly and honestly. Don’t hide income or assets from your lawyer or the bankruptcy trustee or you may find yourself in legal trouble.
Don’t avoid telling your lawyer specific details with your case. You cannot expect your lawyer to remember every important detail without some reminder from you. Speak up if something is troubling you, as this is your future we are talking about here.
You might experience trouble with getting unsecured credit after filing for bankruptcy. Look into getting a secured credit card in order to get back on your feet with building credit. This will prove that you want to improve your credit score. After a time, you are going to be able to have unsecured credit cards too.
Prior to putting in the bankruptcy paperwork, determine what assets are protected from seizure. You can find a listing of the asset types that are excluded from bankruptcy in the Bankruptcy Code. Prior to filing for bankruptcy, it is critical that you go over this list, so that you know if you can expect any of your most valuable possessions to be seized. Failure to do this could cause some ugly surprises down the road when you discover that your valuables must be seized.
Chapter 13 Bankruptcy
Look into filing Chapter 13 bankruptcy. If your source of income is regular and your unsecured debt is less than a quarter million, Chapter 13 bankruptcy is something you are able to file for. Declaring bankruptcy can assist you in consolidating your debt so you can repay it more easily. Typically, any plan you develop will last around 3-5 years. Afterwards, any remaining unsecured debts will be discharged. 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.
File when the time is perfectly right. When you time things right, it does you good, especially when you’re filing for personal bankruptcy. For some debtors, immediate filing is ideal, whereas in other cases, it is smart to hold off until a later time. Find out when the correct time is for you to file for bankruptcy from a bankruptcy legal professional.
Although you have already filed for personal bankruptcy, don’t make the mistake of thinking that you’re now marked for life. By becoming more of a financially responsible individual, creditors will get the picture that you’re trying to dig yourself out of a hole. So begin saving your money and you will realize how much difference it makes when shopping for a home loan or car.