Bankruptcy is a hard decision, but sometimes a necessary one. The more you educate and prepare yourself for the bankruptcy process, the better prepared you will be to handle it. This article contains information that has been gathered from others who have successfully navigated the bankruptcy process.
Prior to putting in the bankruptcy paperwork, determine what assets are protected from seizure. The federal statutes covering bankruptcy can tell you exactly which assets are exempt from forfeiture to pay off creditors. You need to compare this list to the assets you own so that you are not surprised when certain assets are seized. If you aren’t aware of this, you could lose some assets that you value.
Before declaring bankruptcy, ensure that all other options have been considered. For example, if you only have a little bit of debt, you might be better off if you went through consumer credit counseling. You might also be able to negotiate lower payments yourself, but make sure that you get written records of any debt modifications to which you agree.
Chapter 7
Understand the differences between Chapter 7 and Chapter 13 bankruptcy. Chapter 7 bankruptcy completely wipes out your debt. With very few exceptions, the connections between you and your creditors will be severed. But, with Chapter 13, you will be in repayment plan for about 5 years prior to any debts you have being totally dissolved. It is worth while to take your time to research both types of bankruptcy to decide which option works best for you, and your financial situation.
Many bankruptcy lawyers offer free consultations, so go to several before choosing one. Be certain that the person you meet with is really a lawyer. Avoid meeting with paralegals or legal assistants because they cannot give you legal advice. Be sure to check out a number of lawyers so that you will find one who is just right for you.
It is still possible to get a mortgage or car loan, even if you are filing for Chapter 13 bankruptcy. However, it can be more difficult. Your trustee must approve any new loans such as this. You will need to make a budget and prove that you will be able to afford your new loan payments. Be ready to justify the purchase that you need the loan for, too.
Whenever you file a petition for bankruptcy, do not leave out any information about your finances or assets. If you don’t do this, your file could be delayed or dismissed. No matter how insignificant a sum seems, include it in the documentation. This includes income from second or part time jobs, vehicles and loans.
Do a little bit of research into the regulations having to do with filing for bankruptcy before you begin the process. You need to be aware of any issues you will encounter with the bankruptcy code. If you commit severe mistakes, your bankruptcy could be dismissed. Make sure you check into your case and see that you have the paperwork filled out correctly. This will make the process go as smoothly as possible.
Consider any other options available before filing for personal bankruptcy. Credit counseling is one option you should consider. This does not necessarily have to cost you, as there are some organizations that will assist you for free. These organizations can work with creditors to lower your payments and interest rates. You can even pay your creditors through them.
Don’t take large cash advances from credit cards prior to filing since the debts will be eliminated from these cards. That is considered fraudulent behavior, and you can still have to pay the credit card back, bankruptcy or no.
Pay attention to how you satisfy any personal debts before filing for bankruptcy. Check the bankruptcy laws in your state to make sure you have not done anything in the past year to make yourself ineligible to petition for bankruptcy. Do your research rather than making financial decisions blindly.
Credit History
After going through bankruptcy, a lot of people think they are being financially responsible if they shun all forms of credit. This may not be such a great idea because you still need credit to to help build better 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. You can start building up a more responsible credit history by opening one credit card account.
You should immediately vow to be more financially responsible before you actually file for bankruptcy. Don’t go on a spending spree or increase your debt right before you file. Creditors and judges will consider both past and current history when deciding on your personal bankruptcy. Your current spending behavior should show that you are making a real effort to modify your financial habits.
You do not have to lose everything you own when filing for bankruptcy. Personal property is exempt from bankruptcy claims. You may keep personal items like jewelry, household furnishings, clothes and electronics. Your current state’s laws, deciding between Chapter 7 or 13, and your current financial position will determine just how much you get to keep.
Sometimes declaring bankruptcy is simply the only viable option, even though it’s one that nobody wants to take. Having read the preceding piece, you now possess critical insight and knowledge offered by those with actual prior bankruptcy experience. By learning from others who have been there before, it will make things a lot easier on you.
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