Anyone who has had a personal possession, such as a car, repossessed by the IRS should consider bankruptcy. Your credibility with lenders will take a beating, but sometimes bankruptcy is the only thing you can do. The advice below will provide you with all the information you need to understand the results of choosing to file for bankruptcy.
Do not even think about paying your taxes with credit and petitioning for bankruptcy right after. 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. So it does not help you to put the tax bill on your charge card if you know the debt will be discharged anyway.
Do some research to find out which assets you could lose by filing for personal bankruptcy. The Bankruptcy Code lists assets considered exempt from being affected by bankruptcy. Be sure that you study this list. Make yourself aware of any assets you have that could be seized. If you neglect this important step, you might be blindsided when a possession that is important to you is taken to repay creditors.
Avoid paying for a consultation with the bankruptcy attorney, but do ask many questions. You can meet with a few lawyers before deciding on one. Most lawyers provide a free initial consultation. Make a choice only if you have received good answers to all the questions and concerns you brought to the table. You need not decide right away. You can take your time and check out several attorneys before making your final selection.
Understand the differences between Chapter 7 and Chapter 13 bankruptcy. Chapter 7 involves the elimination of all of your debt. Any ties you have concerning creditors will definitely be dissolved. If you file using chapter 13 bankruptcy, you will go through a sixty month repayment plan prior to all your debts being completely dissolved. To make the wisest choice, you will need to understand the consequences of each of these two options.
Many bankruptcy attorneys offer the first consultation with no charge, so consult with several before deciding on one. Ensure that your meeting is actually with the attorney, not with a paralegal or an assistant. People in these positions are unable to offer legal advice. Taking the time to compare lawyers will ensure that you get a person that you can be yourself around.
Safeguard your most valuable asset–your home. Bankruptcy filings don’t necessarily have to end in the loss of your home. Check your home’s current value to see if it has gained equity and get your first and second mortgage papers together. You could also check out the homestead exemption. This lets you continue living in your house, depending on whether you meet certain financial requirements.
Do not forget to enjoy life a little once you get through the initial filing process. Many debtors stress-out during the time of filing. If you let the stress get to you you may get depressed if you’re not doing the proper things to fight it. After you have finished filing for personal bankruptcy, your life will improve.
Remember that filing for Chapter 7 personal bankruptcy will not just affect you. Think about the effect it will have on business associates, friends and family or anyone else who may be a co-signer with you. A Chapter 7 bankruptcy will relieve you of your legal responsibility to pay any joint debts. But, creditors will ask for the money from your co-debtor.
File when the time is perfectly right. Timing is important, and that is especially true when filing for bankruptcy. There are occasions where it pays to delay and others where a quick decision is the best option. Speak with a lawyer specializing in bankruptcy in order to learn when you should file your petition.
Now you can see why bankruptcy may be a good option for you. The consequences for your credit make it a last resort in most cases. Staying informed on how to manage this situation could prevent you from experiencing headaches and it can also help you keep your valuables.