It’s not a good sign when somebody is filing for bankruptcy. Many people feel embarrassed or ashamed if they have to tell other people that they are bankrupt. If you decide to file bankruptcy, research the laws in your state and retain the services of a qualified attorney.
Knowledge is power when you’re considering bankrupcy; there are many websites available to help you. The U.S. Check out the Bankruptcy Institute site and do some research about consumer’s rights. The more you know about it, the better you are able to make the best decision for your situation and to make sure that the bankruptcy proceedings move forward with minimal setbacks.
Credit Card
If you are thinking about paying off your tax obligations with a credit card and then filing bankruptcy, think again. In most states, this debt won’t be discharged, and you could end up owing the IRS a whole lot more. Remember that if you can discharge the tax you can discharge the debt. Just because your credit card could be discharged in bankruptcy does not mean you should use it.
Be certain you are making the right choice before you file for bankruptcy. There are other options available, such as credit counseling for consumers. Bankruptcy is a permanent part of your credit, so before you make such a big decision, you might want to explore all other choices so that your credit history is affected as minimally as possible.
Avoid exhausting your savings or emptying your retirement accounts to pay off creditors if you are considering filing for bankruptcy. Do not tap retirement accounts unless there is no other alternative. Though you may have to break into your savings, keep some available for difficult times. You will be glad you did.
If you know people who have filed for bankruptcy, ask them who they would recommend rather than relying on Internet reviews or worse, just randomly picking someone out of the phone book. There are so many dime-a-dozen companies out there who make it a practice of preying on financial desperation. You need to make sure your bankruptcy goes smoothly, so find someone you know you can trust.
Chapter 7
Know the differences between Chapter 7 and Chapter 13 bankruptcy. In Chapter 7 bankruptcy, your debts are all eliminated. The ties with the creditor will be broken. A Chapter 13 filing involves a repayment plan, though. Typically, you will make a partial payment against your debts over the next 60 months before the balance of the debts is lifted. To make the wisest choice, you will need to understand the consequences of each of these two options.
If you are making more money than you owe, bankruptcy should not even be an option. Though bankruptcy may appear to be a good way to escape your debts, it does affect your credit negatively for a fairly long time.
If you’re concerned about the details of keeping your car, try to ask your attorney about details regarding lowering your monthly payments. In many cases, you can reduce your payment by filing a Chapter 7 petition. You need to have bought your car 910 days before you file, have a loan with high interest and you’re also going to need a good work history.
Make sure you are aware of all your options before you file for bankruptcy. You might want to look into the possibility of credit counseling instead. There are many different non-profit companies that can help you. They can speak with your creditor about getting your payments and interest reduced. You make your monthly payments to the credit counselors, and they pay the money to each creditor.
Do not use credit cards for cash advances prior to filing a bankruptcy petition, as it can affect the dischargeability of the debt. Not only is this fraud, but you could end up having to pay back the money, even once you have filed for bankruptcy.
Do not pay off debts blindly before you file a personal bankruptcy. There are bankruptcy laws which forbid repayment of some creditors within three months before filing. In the case of family members, this period of time may extend to a full year. Before making important decisions in regards to your finances, be sure you understand the laws.
As you can see, you don’t need to surrender to bankruptcy. The information contained in this article can help you to avoid having to file for bankruptcy. Use what you’ve learned here to see how much you’re able to change things now so you aren’t harming your credit history.
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