Being severely in debt is a very frightening experience. Debt can quickly accumulate with a speed you aren’t prepared for. If you’re not careful along the way, debt can be a complicated process to get out of. In the article below, you will learn a few great tips on how you can handle this mounting debt by filing a bankruptcy claim.
If you are considering using credit cards to pay your taxes and then file for bankruptcy, you may want to rethink that. In some places the debt can not be discharged, and you may still need to pay the IRS afterward. Rule of thumb is if the tax is dischargeable, then the debt will be dischargeable. So as you can see, in this situation there is no need to use the card when the debt will be discharged when you file for bankruptcy.
Before undertaking the bankruptcy process, ensure you have made the correct decision. Avail yourself of other options, including consumer credit counseling, if they are appropriate for your situation. Bankruptcy will be on your credit report and affect your credit score for many years to come, so it is a decision that should not be taken lightly. Try to use it as a last resort.
If you are seriously thinking of filing bankruptcy, make sure that you contact an attorney. Filing for bankruptcy is complicated and there is no way you can understand all you need to know. An attorney specializing in personal bankruptcies can assist and make certain things are being handled correctly.
Consider other alternatives before filing for bankruptcy. For example, consumer credit counseling programs can help you by renegotiating your debts with your creditors into payments that you can afford. You might also be able to negotiate lower payments yourself, but make sure that you get written records of any debt modifications to which you agree.
Be sure you know what the difference between Chapter 13 and Chapter 7 bankruptcy is. Research them online to see the positive and negative aspects of each one. If you don’t understand the information you researched, consult with your attorney about the details before you decide which type of bankruptcy you want to file.
Chapter 13 bankruptcy might be a good option, so don’t overlook it. If your total debt is under $250,000 and you have consistent income, Chapter 13 will be available to you. That kind of bankruptcy allows you to hold on to your personal things and real estate while repaying your debts with a plan to consolidate your debt. This lasts for three to five years and after this, your unsecured debt will be discharged. However, if you miss even one payment, the court will dismiss your entire case.
There are many ways to resolve financial difficulties other than bankruptcy, and you should investigate all of them first. Consult with a bankruptcy attorney to see if an interest rate reduction or debt repayment plan is an alternative to filing for bankruptcy. If you are looking at foreclosure, think about a loan modification program. Some lenders will make concessions rather than losing the money owed to bankruptcy. These concessions include waiving late fees, lowering interest rates, and changing the loan term. When all is said and done, the creditors want their money, so sometimes it’s best to deal with a repayment plan than with a bankruptcy debtor.
Even if you are involved with Chapter 13 bankruptcy, it is still possible to get a mortgage or an automobile loan. It is much harder. You will need to go through various hoops in order to be approved for any new loan type. Draw a budget up and show how you can pay the newer loan payment. You will always have to let them know why this item needs to be purchased.
Sometimes in life things just happen which are out of your control. This article just gave you a few good pointers on what you can do in order to gain control of your finances when facing bankruptcy. Take the advice that was given and make a difference in your life.