Bankruptcy is a complex process. Different bankruptcy filing types are available, and the right one for you will depend on the kinds of debts you have and your overall financial picture. You need to know all you can about bankruptcy before you decide to file your petition. This information may point you in the right direction.
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. Rule of thumb is if the tax is dischargeable, then the debt will be dischargeable. This means using a credit card is not necessary, when it will just be discharged.
If filing bankruptcy is in your future, don’t waste any savings you may have attempting to pay off your debts. You shouldn’t dip into your IRA or 401(k) unless there is nothing else you can do. 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.
Prior to filing for bankruptcy, discover which assets cannot be seized. The federal statutes covering bankruptcy can tell you exactly which assets are exempt from forfeiture to pay off creditors. It is important that you read this list before filing for bankruptcy, so that can find out whether or not your most prized possessions will be seized. If you do not read this list, you could be in for some nasty surprises in the future, if some of your most prized possessions are seized.
See if there is an alternative you can use before declaring bankruptcy. Those with smaller debts may find use in a program for consumer credit counseling. Sometimes you can negotiate a reduced payment, though you must strive to get it all in writing.
Safeguard your home. Filing for bankruptcy will not always result in losing your home. It depends what your home value is and if there is a second mortgage, as all this stuff comes into play when determining if you can keep the home. Otherwise, look into the homestead exemption which may allow you to stay in your home if you meet financial threshold requirements.
There are differences between Chapter 13 bankruptcy and Chapter 7; be sure to familiarize yourself with both. Weigh all the information you can find on- and off-line to make an educated decision. Go to a specialized lawyer to ask your questions and get some useful advice on what to do.
Be sure that bankruptcy really is your best option. You may be able to manager gets more easily by consolidating them. Bankruptcy is a stressful process. Remember that your credit will be affected by the mark of personal bankruptcy for a long time. Therefore, before you file for bankruptcy you need to consider all of your alternatives.
It is possible to obtain new vehicle and home loans while a Chapter 13 case remains active. There will, however, be obstacles. You will be required to meet a trustee and be approved for a new loan. When meeting with the trustee, bring a budget which shows that you will be able to afford the payment on the loan you are trying to get. The odds are also good that you will be asked exactly why you’re purchasing a new item. Make sure you have a good reason.
If you are considering bankruptcy, do not leave it until the last possible moment to do so. Some people just ignore the trouble they are in financially and think it will go away later. This is not a good decision. All your personal debts will easily go haywire, building and collapsing very quickly. This often leads to foreclosures and garnishments. As soon as you know that you are too far over your head, make the move to call an attorney skilled in bankruptcy court, to weigh your options.
Before you make the final decision to file bankruptcy, consider the other options you have. One good option might be credit counseling. There are some good non-profit organizations that could help you. They can negotiate with each of your creditors to work out payments that you can afford, along with reduced interest rates. They pay your debts and you repay them.
Don’t take large cash advances from credit cards prior to filing since the debts will be eliminated from these cards. This is fraud, and even if your other debts are discharged, you will have to pay the money back.
Understand that in the long run, a bankruptcy filing may be better than continued missed paymsent when it comes to your credit score. Though bankruptcies can remain on your credit record for 10 years, it is possible to begin credit repair initiatives immediately. The main benefit to filing for bankruptcy is the chance at a new start.
Now you know that filing for bankruptcy requires a lot of thought. If you feel that it is best for you to file for bankruptcy, a qualified attorney can be of great assistance, ensuring you make the best choices.