Bankruptcy effects a myriad of people each with different financial situations. Sometimes there is simply no viable alternative in a given financial situation. This is when it’s important to understand the basics of bankruptcy. If you have questions about what you should do in this situation, continue reading to learn some great advice.
You should avoid paying your taxes with credit cards and then immediately file for bankruptcy. Generally, this type of debt is not covered by bankruptcy filing, and you will still have a large debt owing to the IRS. Bear this in mind; if the tax can be discharged, then the debt can be as well. So, in short, do not use your credit cards to pay off debts right before you file for bankruptcy.
If you are faced with the choice of filing for bankruptcy or using your emergency fund or retirement accounts to pay creditors, opt to file for bankruptcy. You should never touch your retirement accounts, unless you have absolutely no choice. Although you may need to tap into your savings, you should not use up all of it right now and jeopardize the financial security of your future.
Ensure that you are providing genuine details when filing a bankruptcy petition, because honesty is the best policy when dealing with bankruptcy. You must avoid the temptation to conceal any valuables, money or other assets from the courts. If they find that you have lied, you may be faced with fines, penalties or the inability to file in the future.
You are going to get found out and get in trouble if you don’t disclose all your assets, so be totally honest from the beginning. Whomever you plan to use should know a lot about the finances that you have, both the good and the bad. Being honest is both the right thing to do and, moreover, it is required by law.
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 will meet with you for free and give you helpful advice, so meet with several. Make a decision when all your concerns and questions have been addressed well by one lawyer in particular. There is no need to feel rushed to decide to file after you talk with your bankruptcy lawyer. You can take your time and check out several attorneys before making your final selection.
Be aware of recent changes, if any, in the bankruptcy code. The laws change a lot, so you need to look them up and have a better idea of how to properly approach the bankruptcy process. Your state’s website should have the information that you need.
Prior to declaring bankruptcy you really need to be sure that you’ve exhausted all your other options first. For instance, a consumer credit counseling program may be a better bet if your debts are relatively small. It is also possible to do your own debt negotiations; however, be sure to get everything in writing.
Many bankruptcy attorneys offer the first consultation with no charge, so consult with several before deciding on one. Talk to the lawyer and not his assistant, who may not be legally able to help you. Look for an attorney until you find one you feel comfortable with.
Before you file for bankruptcy, make sure you understand your rights. You might hear from your creditors that your debts cannot be canceled through bankruptcy. There are, indeed, some debts that cannot be bankrupted. Among them are student loans, child support and alimony payments. Should you face a creditor like this, and you are informed that the debt is not valid under the bankruptcy. These types of infractions should be reported.
Don’t put off filing for bankruptcy until you are in dire straits. It can be difficult to ask for help, but as you wait, you accrue more debt. If you talk to a financial professional, they can assess your situation and give you suggestions on what could solve the problem.
A lot of people who file for bankruptcy swear they will never use credit of any kind ever again. In reality, though, credit cards can be a useful tool for people who are looking to rebuild their credit score after bankruptcy. Avoiding credit altogether prevents you from rebuilding your credit standing, and will therefore serve as an obstacle when you wish to finance a house or a vehicle. Take it slow and get yourself one credit card and slowly rebuild your credit.
It’s not going to be fun and it’s not going to be easy, but you can simply the process if you’re reading the right information. The process is anything but simple, and information will become your best friend during this difficult time. Don’t forget to implement the tips and tactics you have read above in order to help you when filing a bankruptcy claim.