Nowadays, more and more people are facing the sad reality that they have no choice but to file for bankruptcy. The economy has hit many people from all walks of life hard. Just because it’s more commonplace doesn’t make it simpler, however. So before you decide to file a claim to get out of debt, you first need to ensure that you understand the implications of the entire process. The following tips are going to help clarify some bankruptcy confusion for you.
Do not use a credit card to pay income taxes and then file for bankruptcy. Most places will not consider the debt dischargeable, meaning you will have to pay the IRS a lot of money. One thing that you should remember is that if your tax is dischargable, your debt will also 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 filing for personal bankruptcy, make sure you are doing the right thing. It is possible to take advantage of other options, like consumer credit counseling. Bankruptcy permanently affects your credit, so avoid filing until you have exhausted all of your other options.
Instead of relying on random selections from the phone book or Internet, ask around and get personal recommendations. There are a number of companies who may take advantage of your situation, so always work with someone that is trustworthy.
Make sure your home is safe. Losing your home is thought of as common in bankruptcy cases, but it is by no means inevitable. 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. Another option is the homestead exemption that has certain income and financial requirements, but may also allow you to keep your home.
Learn and gain a firm grasp of the differences in applying for Chapter 7 bankruptcies versus Chapter 13 bankruptcies. Take time to research this online and see the pros and cons for filing each one. Do not hesitate to have your lawyer explain any details that seem difficult to grasp. This will help ensure you make the right choice when filing.
Make sure the time is right when you file a bankruptcy claim. Timing can be critical when it comes to personal bankruptcy cases. In some cases, you should file for bankruptcy right away, but in others, there may be reasons why filing quickly would be a bad idea. Have a chat with a bankruptcy specialist to discover when the ultimate time would be for you to file.
Consider other options prior to filing for personal bankruptcy. You should consider credit counseling. Many different non-profit entities exist that can assist you without charging you any fees. They’ll talk to creditors and strive to get both your payments and interest rates lowered. The payments you make go to the credit counseling company, and they send that money to your creditors.
You do not lose everything that you own when you decide to declare bankruptcy. You can keep personal property. This covers items such as clothing, jewelry, electronics and household furnishings. This will all depend on the type of bankruptcy you choose, your finances, and your state’s laws, but you could hold onto your large assets like the car and the family home.
In conclusion, bankruptcy is common these days, many times because of the way the economy is. To help you make good decisions regarding bankruptcy, consult with this article and use the knowledge to your advantage.