Do not take bankruptcy lightly, this is a serious thing. Therefore, it is very important to understand what you are doing when you file for bankruptcy. Use what you learn here to guide you towards making the right decisions regarding personal bankruptcy. No matter what tough decisions you have to deal with, you can do it!
You should avoid paying your taxes with credit cards and then immediately file for bankruptcy. In a lot of places, the debt cannot be discharged, and you may still owe money to the IRS. Generally speaking if you can discharge the tax, you can discharge the debt. Therefore, you have no reason for use of a credit card, if the amount is to be discharged in due process of the bankruptcy.
If filing bankruptcy is in your future, don’t waste any savings you may have attempting to pay off your debts. No matter what you do, do not touch your personal savings unless there is no other option. You may need to tap your savings, but don’t empty your savings account, as this could leave you in a difficult situation down the road.
Don’t file for bankruptcy until you know what assets of yours can and can’t be seized. The Bankruptcy Code has lists of various asset types that are exempt during the process. It is important to be aware of this list so you will know what assets are saved. 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.
When you do meet with a lawyer make sure that they answer all of your questions and that they do not charge you for consultation alone. Most lawyers offer free consultations, so talk to a few before making your decision. Make your decision after all of your questions have been answered. You need not decide right away. That gives you the chance to speak to a number of lawyers.
Before you file for personal bankruptcy, be sure that you are cognizant of all current laws. It can be tough to keep up with them on your own, and because they change often, a bankruptcy attorney can help you keep track for the sake of your filing process. A qualified bankruptcy attorney is the best source for the latest information regarding the laws in your state.
Your most important concern is to protect your home. Filing bankruptcy does not necessarily mean that you will lose your house. Depending on whether the value of your home has decreased or if you have a second mortgage on the home, you may end up keeping it. There are other options such as a homestead exemption which offers you a chance to remain in your home, depending on whether or not you meed certain financial conditions.
Know and understand the difference between filing for Chapter 7 bankruptcy versus Chapter 13 bankruptcy. Get a good grasp of the pluses and minuses each type of filing involves by researching both of them extensively. If you have trouble understanding the wealth of information, talk to your lawyer so he or she can help you make an informed choice.
Before you file for bankruptcy, make sure you absolutely need to. Consider whether debt consolidation may be a more viable alternative. Filing a claim can take a long time and cause much stress. It will certainly affect the credit rating that you have in the future. Because of this, you need to think of bankruptcy as a nuclear option; that is, a last resort.
You could see about filing for Chapter 13 personal bankruptcy. If you owe an amount under $250,000 and have a consistent income source, Chapter 13 may be right for you. Declaring bankruptcy can assist you in consolidating your debt so you can repay it more easily. That plan lasts approximately three to five years, and then you are discharged from unsecured debt. Just ensure that you take necessary precautions, as missing one payment can result in the court dismissing your case.
Consider all options before filing for bankruptcy. Some alternatives to filing for personal bankruptcy include debt repayment plans, interest rate reduction plans, and debt consolidation. Talk with the personal bankruptcy lawyer to find out more. If a foreclosure is your reason for filing look into your options with your bank first, such as a loan modification. Lenders can assist you in a lot of ways, by cutting interest rate charges and cutting off late fee charges. They can also lengthen the loan. Many times creditors are happy to work with you to ensure that you will repay your loan.
You can easily see that there are multiple ways to handle personal bankruptcy. Do not be overwhelmed by all the information. Take a few moments to ruminate upon these tips. You can make more thoughtful decisions this way.