If you have more debt than you could ever hope to pay off, you might feel like your life is over. Things can quickly add up and before you know it, the situation is completely out of control. Unfortunately, this problem is difficult to fix, once you realize you have it. You should read ahead for great tips on how to face and handle a bankruptcy, when your debt is insurmountable.
Generally bankruptcy is filed when a person is facing insurmountable debt. If this applies to you, be sure that you know what the laws of your state are. Bankruptcy laws vary from state to state so it is important to do your research. Your house is safe in certain states; however, in other states, it isn’t. You should be aware of local bankruptcy laws before filing.
Do not attempt to pay your taxes with your credit cards and subsequently file for bankruptcy. In most states, you will still owe money to the IRS and have to take care of the interest of your credit cards. Generally speaking if you can discharge the tax, you can discharge the debt. So as you can see, in this situation there is no need to use the card when the debt will be discharged when you file for bankruptcy.
Instead of jumping into a bankruptcy filing, be sure your situation requires it. Debt advisors are one of the many other avenues you can consider. Bankruptcy is a serious negative on your credit history so make sure you have no other options before you file. It is important to keep your credit history as positive as possible.
Determine which of assets are safe from seizure and which are not before filing for personal bankruptcy. The Bankruptcy Code includes a list of the types of assets that are exempt from the bankruptcy process. Be sure that you study this list. Make yourself aware of any assets you have that could be seized. Without reading the list, you may be shocked at which possessions can be taken from you.
Be aware of recent changes, if any, in the bankruptcy code. Bankruptcy laws are in constant flux, so just because you knew the law last year doesn’t mean that the laws will be the same this year. Your state will have a website to check, or a number you can call, to learn the latest changes in the bankruptcy laws.
There are two types of bankruptcy filing, Chapter 7 and Chapter 13 so make sure you know the differences. The Chapter 7 variety can help you eliminate your debts almost entirely. All of your financial ties to the people you owe money to will disappear. If however you enter Chapter 13, you will go into a five year repayment program prior to your debts dissolving entirely. It is important that you understand the differences between the different types of bankruptcy, so that you can decide which option is best for you.
Talk to a lot of different bankruptcy lawyers; most of them will give you a free consultation. Never settle for speaking with a paralegal or an assistant. They are not trained, nor allowed, to pass on legal advice. Look for an attorney until you find one you feel comfortable with.
Be sure that bankruptcy really is your best option. Consider whether debt consolidation may be a more viable alternative. A bankruptcy filing takes a great deal of time, and it can be extremely stressful. In addition to the stress associated with bankruptcy, you will also have to deal with severely restricted credit in the future. Because of this, you should be sure that bankruptcy is your only option before you file.
Chapter 13 Bankruptcy
Find out if you can use Chapter 13 bankruptcy, as it may help you better than the other laws. If you posses a regular source when it comes to income, and you have less than $250,000 of unsecured debt, you could file using Chapter 13 bankruptcy. That kind of bankruptcy allows you to hold on to your personal things and real estate while repaying your debts with a plan to consolidate your debt. It usually takes three to five years to fulfill this plan. When the time is up, you’re unsecured debts will be discharged. Keep in mind that even missing one payment can be enough for your whole case to get dismissed.
Sometimes in life things just happen which are out of your control. Apply the advice from this article to help yourself better understand filing for bankruptcy. Having this information can change the way you face this challenge.