Nobody is enthusiastic about filing for bankruptcy, but sometimes it is simply the right financial choice. This decision may not be easy, but it is comparatively easier when you know what the process entails and how to navigate it. Read this article for some helpful tips from those informed about bankruptcy.
People generally mostly feel the need to get a bankruptcy filed for when they have more money owed than they can get. If you find yourself needing to file for bankruptcy it is important to familiarize yourself with the state laws. Every state has a separate law having to do with bankruptcy. Some states may protect you home, and some may not. Familiarize yourself with the bankruptcy laws of your state prior to filing.
Do not use a credit card to pay income taxes and then file for bankruptcy. In many areas of the country, this debt will not be dischargeable, and you could be left owing a significant amount to the IRS. Generally speaking if you can discharge the tax, you can discharge the debt. Thus, it doesn’t make sense to use a credit card when it is going to be discharged when you file for bankruptcy.
When it appears likely that you will file a petition, do not start spending your last remaining funds on debt repayment. Leave your retirement accounts untouched unless there is absolutely no other alternative. Your savings accounts offer valuable financial security so try to leave them intact.
After filing for bankruptcy, you could have trouble acquiring unsecured credit. If this happens, instead you should turn your attention to secured credit cards. Using a secured card not only helps to rebuild your credit, but it also keeps you from going more in debt with credit card bills. If you pay your secured card off on time, you’ll eventually find that companies will start offering you unsecured credit.
If a personal recommendation comes your way, this should be a lawyer you focus on. Some companies just want to take advantage of you, so it is important that you have help from someone you trust.
Before you decide to file bankruptcy proceedings, determine which assets will be safe. Certain assets, as listed in the local bankruptcy regulations, are immune from seizure during bankruptcy. 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. If you fail to go over this list, you may be unpleasantly surprised sometime down the road if any of your most valued items are seized.
Protect your house. Just because you’re going bankrupt doesn’t mean that you also have to be homeless! It may be possible to keep your home if the value has depreciated, or there is a second mortgage. You should also examine the possibility of taking a homestead exemption. This could apply if your income falls below the financial threshold.
Understand the differences between Chapter 7 and Chapter 13 bankruptcy. Do some research about these options so you can choose the best one. If you have trouble understanding the wealth of information, talk to your lawyer so he or she can help you make an informed choice.
Don’t hide from your friends and family while you go through bankruptcy. Going through a bankruptcy can be an excruciating experience. It is extremely stressful and long, and it can leave you feeling ashamed of yourself. It is not uncommon for a person to feel the need to pull away from loved ones during the process. However, becoming a hermit will only increase feelings of self-doubt and could make you depressed. Time spent with people who care about you can give you new perspective on your financial situation.
If you are moving forward with a Chapter 7 bankruptcy, you need to learn how that can negatively affect anyone who shares loans with you. When filing Chapter 7, you are not legally responsible for the debts in your name. Creditors, however, will hold the co-signer liable for the entire balance of the debt.
While no one wants to go through bankruptcy, at times it cannot be avoided. After reading these tips, you can go through the process with some helpful tips. You can take comfort in the fact that others have been in this situation before you, so take heed from their experiences to help you deal with your own.