Filing for personal bankruptcy protection is an important strategy for people that have had assets, such as their vehicle, seized by the IRS. Filing for personal bankruptcy may be the only option available to you; even though, it can be very hard on your credit rating. Read this article to learn more about filing bankruptcy and the consequences from doing so.
Do not consider paying off tax debt with credit cards and filing for bankruptcy afterward. It won’t work. In most states, this is not dischargeable debt. Therefore, you will end up owing the IRS a lot of money. Generally speaking, debt incurred to pay taxes and the tax bills themselves are treated the same in a bankruptcy. If you live in an area where tax can be discharged through bankruptcy, financing your tax bill is pretty pointless.
A key tip for those filing a personal bankruptcy petition is to always be completely honest in all documentation. You might feel tempted to not declare certain assets in your bankruptcy in order to protect them from forfeiture, but if you’re found out, the process could take longer, or worse, you might be banned from filing for bankruptcy completely.
Be sure to remind your lawyer if it seems that some details of your situation are forgotten. Don’t just assume they already know and that they have these important details committed to memory or written down. Be as open as you can be to make sure your bankruptcy goes as well as possible.
Prior to filing for bankruptcy, determine which assets, if any, are exempt from being seized. The Bankruptcy Code lists the kinds of assets which are exempted when it comes to the bankruptcy process. It’s crucial to read that list before filing to see which of your prized possessions can be seized. Without reading the list, you may be shocked at which possessions can be taken from you.
You must be entirely candid when it comes to declaring assets and obligations in your bankruptcy petition. Whomever you plan to use should know a lot about the finances that you have, both the good and the bad. Don’t hold anything back and formulate a smart strategy to deal with the reality you are facing.
Don’t ever pay a bankruptcy attorney for a consultation, and ask a lot of questions. When you arrive at a consultation ask plenty of questions. You should also seek free consultations from several attorneys prior to choosing one. Choose to file only if your lawyer has convinced you that this is the best decision. You do not need to make a decision immediately after the consult. Take your time, and schedule consultations with more than one lawyer.
Know and understand the difference between filing for Chapter 7 bankruptcy versus Chapter 13 bankruptcy. Learn the benefits and drawbacks of each type before deciding which is right for you. If you are confused by what you find, be sure to ask your attorney to explain anything that is unclear before you make your decision about filing.
If you are making more money than you owe, bankruptcy should not even be an option. Although you may see bankruptcy as a free pass to eliminate your debt, if you can slowly whittle away at your debt with your income, it will be much better than killing your credit score with a bankruptcy filing.
If you have fears that you will lose your car, ask your lawyer about the possibility of lowering your car payments. Chapter 7 bankruptcy is one of the most common and effective. If you meet the criteria specific to your state, it may be a good option to consider.
Filing for Chapter 13 bankruptcy will not prevent auto loans or mortgages from being obtained. However, there are steps which must be taken to ensure you are within the law of bankruptcy. Your trustee must approve any new loans. Document your budget to prove that you’re going to be able to make the payments. You will need to be able to explain why the purchase is necessary.
When filing for bankruptcy, list all of your financial information. If you don’t do this, your file could be delayed or dismissed. No matter how insignificant a sum seems, include it in the documentation. Anything, like a job on the side, assets, like cars, and any outstanding loans should be included.
If you plan to pay debts off before you file for bankruptcy, be careful. Bankruptcy laws generally don’t cover situations which occurred within a short time frame prior to filing, such as the previous 90 days worth of credit card debt. Learn the rules regarding bankruptcy before making any final financial decisions.
As mention earlier, you always have the option to file for bankruptcy. But, filing ought not to be an automatic decision, as it does have serious implications. Knowing the ins and outs of the bankruptcy process will save you from stress that will arise if you miss something down the line.