Bankruptcy can be a choice for people who have have had the IRS repossess some of their valuables. Bankruptcy totally destroys your credit, but in many cases, people have no choice but to file. Keep reading to gain a better understanding of the bankruptcy process and of the ramifications of initiating a filing.
Do not use a credit card to manage your tax issues and then try to file bankruptcy. Most of the time, you won’t be able to discharge this debt, and you could make things worse with the IRS. Generally speaking, debt incurred to pay taxes and the tax bills themselves are treated the same in a bankruptcy. There isn’t any reason to use a credit card to pay the tax bill since the bill can be discharged anyway.
Always remind your lawyer of specifics that are important to your case. You cannot expect your lawyer to remember every important detail without some reminder from you. It is in your best interest to speak out. You are in control of the outcome of your bankruptcy.
If you are planning to file for bankruptcy, be sure to learn what types of assets you will be able to keep and which can be seized. The Bankruptcy Code lists assets considered exempt from being affected by bankruptcy. You need to compare this list to the assets you own so that you are not surprised when certain assets are seized. If you don’t read it, you could have nasty surprises pop up later due to your prized possessions being seized.
You must be entirely candid when it comes to declaring assets and obligations in your bankruptcy petition. The person you choose to file with needs to know both the good and bad aspects of your finances. Being honest is both the right thing to do and, moreover, it is required by law.
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. Negotiating with creditors is another option, but creditors are notorious for “forgetting” these agreements, so get them in writing!
Chapter 7
Be sure you know how Chapter 7 and Chapter 13 differ. Should you choose Chapter 7, your total debt load will be erased. Your responsibilities to your creditors will be satisfied. Bankruptcy under the rules of Chapter 13, on the other hand, require you to work out a payment arrangement to pay back the agreed upon amounts. You need to determine which type of bankruptcy is right for you given your unique financial situation.
It’s a good idea to meet with a number of bankruptcy lawyers before settling upon one. The majority of them offer free initial consultations. Ask to speak with the licensed attorney and not a representative, who can not offer legitimate legal counsel. Interviewing multiple attorneys is a good way to find the best fit.
Chapter 13
Consider Chapter 13 bankruptcy, if you chose to file. If you have less than a quarter of a million dollars in debt that is unsecured and a regular income, you are eligible to file a Chapter 13. You can keep personal possessions, as well as real estate, while paying into a debt consolidation system. Typically, this goes on for roughly three to five years, and once this time has expired, your unsecured debt is eliminated. Bear in mind that if you miss a single payment that is due under your plan, the entire case will be dismissed by the Court.
Before ultimately deciding whether or not to file for bankruptcy, be sure to weigh the different options available to you. Find out if you can receive a reduced interest rate or altered repayment plan instead of bankruptcy filing. If foreclosure is imminent, see if your loan can be altered at all through a modification plan. Sometimes your lender will work with you to help pay off your debt by giving you a lower interest rate, forgiving late fees, or extending the time period of your loan. Remember that creditors desire to get paid and usually debt repayments are often preferable when dealing with bankrupt debtors.
Remember that your Chapter 7 filing may affect other people in your life as well. A Chapter 7 bankruptcy will relieve you of your legal responsibility to pay any joint debts. Any co-debtor may well be held responsible for paying off the total remaining amount of the debt, though.
This article has made it known that bankruptcy is something you may be able to turn to. However, it must not be your first choice due to it causing complications on your credit. Learn all that you can about bankruptcy before you file. That way, you will be prepared to make the best decision for a happy financial future.
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