Nowadays, many people have racked up huge amounts of debt. It seems that they can never pay their bills down, and they’re constantly pursued by collection agencies and creditors. If this situation sounds familiar, you may decide to consider filing personal bankruptcy. Continue reading this article so you can figure out if this is something you should do.
If you are thinking about paying off your tax obligations with a credit card and then filing bankruptcy, think again. Generally speaking, taxes are not a dischargeable debt. The delays caused by this sort of tactic could leave you owing the IRS a great deal in interest and penalties. One thing that you should remember is that if your tax is dischargable, your debt will also be dischargeable. Just because your credit card could be discharged in bankruptcy does not mean you should use it.
Always be honest with the information you give about your finances. You may be tempted to try to hide income and personal assets from discovery, but doing so often leads to major complications, monetary penalties and the possibility that your case will be thrown out of court.
Instead of relying on random selections from the phone book or Internet, ask around and get personal recommendations. There are a number of companies who may take advantage of your situation, so always work with someone that is trustworthy.
Research what assets are exempt from seizure before you decide to declare bankruptcy. Check the bankruptcy laws in your state to find out if certain items are excluded from your bankruptcy filing. It is vital that you know the things on this list prior to filing for bankruptcy, in order to determine which of your possessions will be taken away. If you fail to do so, things could get ugly.
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. If you file for Chapter 13 bankruptcy, however, you will enter into a 60 month repayment plan before your debts are completely dissolved. When choosing the type of personal bankruptcy that is correct for you, it is very important that you know the differences.
It is important to know how Chapter 7 filings differ from Chapter 13 filings. Investigate the benefits and pitfalls of both. Online resources may be able to provide all the information you need. If the information you read is unclear to you, take the time to go over the specifics with your lawyer before making a decision on which type you will want to file.
Look into filing Chapter 13 bankruptcy. If your total debt is under $250,000 and you have consistent income, Chapter 13 will be available to you. This type of bankruptcy protects your assets from seizure and lets you repay your credits over the course of a few years. Lasting anywhere from three to five years, this plan will allow you to be discharged from unsecured debt. Consider that if you even miss one payment, your case will not be considered by the court.
Don’t isolate yourself from family and friends. Going through a bankruptcy is never easy. It takes time and a lot of people feel stressed and ashamed throughout this procedure. A lot of people hide away until the entire proceedings have been played out. However, self imposed isolation will only make you feel even worse about the process and could even lead to depression. Remember that it is not your families fault for your financial hardships and use this time to pull together and be strong.
If your paycheck is larger than your debts, avoid filing for bankruptcy. The cost to your credit history far outweighs the simplicity of the easy-out bankruptcy. This is a hard pill to swallow for many.
Chapter 7 Bankruptcy
Before you choose Chapter 7 bankruptcy, think about what effect that is going to have on any co-signers you have, which are usually close relatives and friends. 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. So, in short, if you file bankruptcy, but they do not, they will be held completely responsible for your joint actions.
When you file for bankruptcy, you should be very aware of your rights. Occasionally, debt collectors will attempt to convince you that your debt isn’t eligible for bankruptcy. Only a few debts are immune to bankruptcy. Taxes, student loans and child support would be the major ones. If you are told by a debt collector that your debts are not dischargeable, make a record of your conversation and report the individual to the proper state authorities.
Do your homework so you thoroughly understand the laws pertaining to bankruptcy before you file. For instance, you are not allowed to move assets from your name to someone else’s for a year before you file. It is also illegal for someone who files for bankruptcy to drastically increase their debts on credit cards immediately before filing.
Make sure you know the bankruptcy laws before filing your petition. There are a lot of pitfalls in the personal bankruptcy code that could lead to issues with your case. If you do not know bankruptcy law, your bankruptcy case could be dismissed. This is exactly why it’s imperative that you take the time necessary in order to research what you can about bankruptcy. That way, you will have an easier road.
Exercise some caution in repaying your debts when you know a bankruptcy filing in your future. The laws regarding bankruptcy most often prevent you from paying back some creditors for up to 90 days before filing, and friends and family for up to one year. Read the rules before making financial decisions.
Now you know that there’s so much assistance out there when it comes to filing for bankruptcy. If you go into the process armed with knowledge and confidence, you can wipe away your debt and give yourself a fresh start.