Being in debt can be extremely stressful. One day you’re looking at a little mole hill; the next day you’re staring down a mountain. It doesn’t take long at all before the debt becomes too much to handle. You may realize that your options at this point are limited. The tips in this article will help you know what should be done if you find yourself contemplating bankruptcy.
If you are considering paying your taxes with credit cards and turning around and filing bankruptcy–they are on to you. In many areas of the country, this debt will not be dischargeable, and you could be left owing a significant amount to the IRS. If the tax can be discharged, so can the debt. Because of this, transferring the debt to your credit card is pointless.
Retirement Accounts
If you are faced with the choice of filing for bankruptcy or using your emergency fund or retirement accounts to pay creditors, opt to file for bankruptcy. You should never touch your retirement accounts, unless you have absolutely no choice. Of course you will have to touch some of your savings to get through all of the hearings, but do not put out any money that you do not have to by law.
Honesty is of utmost importance during your filing, even though it may be tempting to “pad” your answers a little. Do not hide any income or assets or go on a spending spree before filing for bankruptcy: the court will find out and will not have a positive opinion of you.
Use a personally recommended bankruptcy attorney instead of one found through the Internet or phone books. Some companies just want to take advantage of you, so it is important that you have help from someone you trust.
Avoid paying for a consultation with the bankruptcy attorney, but do ask many questions. Most lawyers offer free consultations, so talk to a few before making your decision. Only choose a lawyer if you feel like your questions were answered. It is not necessary to come to a decision immediately following the meeting. This will give you extra time to interview several attorneys.
Familiarize yourself with the bankruptcy code before you file. Bankruptcy laws change a lot and before making the decision to file, you need to know what you are getting yourself into. If you are not sure about the current laws all you have to do is look into what laws have been passed.
Repayment Plans
Think about all the choices available to you when you file for bankruptcy. A lawyer that specializes in bankruptcy law can help advise you of other options, such as repayment plans and reducing interest rates to relieve some of the burden. You can apply for a modification of your mortgage if your home is going into foreclosure. Your lender can help you get current on your loan by offering you one of a number of modifications, such as getting rid of late charges, lowering interest rates, or extending the length of the loan. Ultimately, creditors want their money, and many times repayment plans are preferable to a debtor that is bankrupt.
If keeping your vehicle is of great concern, ask your lawyer if you can secure a payment modification. Often, you can negotiate a lower payment through bankruptcy. Here are the qualifications in regards to your vehicle: you must have bought it nine hundred and ten days or more before filing for personal bankruptcy; your loan must carry high interest; your work history must be steady and solid.
Before declaring bankruptcy, it is important to know your rights. Don’t take a debt collectors word for it simply because they tell you that you can’t have many or all of your debts erased by bankruptcy. Only a few debts, including child support and tax liens, are ineligible for bankruptcy. If your creditors are telling you any other kind of debts cannot be cancelled, get a written proof and send it to the general office of your state’s attorney to report this illegal behavior.
Know the bankruptcy code backwards and forwards before filing. Did you know that in some areas, you cannot transfer assets from yourself to another person in the year previous to filing occurring? Also, a person cannot legally increase their debt amount on credit cards prior to filing.
Credit History
Keep in mind though that personal bankruptcy might prove a wiser choice for your credit history than keeping making late payments. Though it will still mar your credit history for up to 10 years, the damage can be improved. The main benefit to filing for bankruptcy is the chance at a new start.
Lots of people who file for bankruptcy say they will never use credit cards again. This is not wise, since credit cards can help to rebuild credit. Good credit is needed to make major purchases, such as those for homes and automobiles. However, if you don’t use credit, you will be unable to establish a good credit history, which is necessary in order to make those purchases. The best way to help build your credit is to get one credit card and pay it off at the end of every billing cycle.
As you’re well aware of by now, it doesn’t take long to find yourself drowning in debt with no way out. When you’re ready to proceed with filing, the above tips should provide a few solid guidelines to follow. Make sure that you don’t take them for granted. Take the advice that was given and make a difference in your life.
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