Bankruptcy is a difficult decision for anyone to make; however, it is sometimes necessary. It’s best to make the decision of filing for personal bankruptcy after doing a little research and gaining a clear understanding of the topic. In the following article you can pick up some handy advice based on the experiences of other people who have had to deal with the bankruptcy process.
Think twice if you have struck upon the idea of paying off your taxes by credit card and subsequently filing for personal bankruptcy. In most states, you will still owe money to the IRS and have to take care of the interest of your credit cards. Transferring the debt to another medium (e.g. a credit card) won’t magically make a tax debt discharagable, either. Therefore, you have no reason for use of a credit card, if the amount is to be discharged in due process of the bankruptcy.
Never lie about anything in your bankruptcy petition. Do not try to shield some assets or income from your creditors. This can get you in serious trouble and prevent your bankruptcy petition altogether.
Bankruptcy Laws
Educate yourself about state bankruptcy laws and possible outcomes before filing your petition. Bankruptcy laws change a lot and before making the decision to file, you need to know what you are getting yourself into. Your state’s website should have the information that you need.
It is important to know how Chapter 7 filings differ from Chapter 13 filings. Do some research about these options so you can choose the best one. If there is anything that you don’t understand, go over it with your lawyer so that you can make the best decision.
If your income exceeds your obligations, you should not seek bankruptcy protection. Although bankruptcy may feel like a simple method of getting out of your large debt, it leaves a permanent mark on your credit history for up to 10 years.
You should weigh every option before thinking about bankruptcy. Consult with a bankruptcy attorney to see if an interest rate reduction or debt repayment plan is an alternative to filing for bankruptcy. If you are facing foreclosure, consider a loan modification plan. The lender can help your financial situation by getting interest rates lowered, dropping late charges, and in some cases will allow you to pay the loan over a longer period of time. After all is said and done, your creditors will still want their money. For this reason, you may wish to investigate debt repayment programs in lieu of bankruptcy programs.
Chapter 7 Bankruptcy
Before you choose Chapter 7 bankruptcy, think about what effect that is going to have on any co-signers you have, which are usually close relatives and friends. Once you file for Chapter 7 bankruptcy protection, you no longer have legal responsibility for debts that you and any co-signers originally agreed to. Creditors, however, will hold the co-signer liable for the entire balance of the debt.
There are a lot of things to consider prior to filing for bankruptcy. One option to consider is credit counseling. A number of non-profit companies can assist you. They can help you to lower both your debts and interest owed to creditors. They act as intermediaries between you and your creditors; you pay the counselors and they pay the companies to which you owe money.
Before you file for bankruptcy, be sure you know how to properly repay your debts. Bankruptcy law may actually prevent you from repaying your credits for three months. Worse, if you’ve taken out a loan from your family, you can’t repay them for a whole year before filing. Do your research and figure out the laws for you.
When you file for bankruptcy remember that you are not going to lose all your assets. You can keep your personal property. Items such as family mementos, home decor, furniture, personal jewelry, clothes and more fall under private property. The laws of your state and the kind of bankruptcy for which you are filing, coupled with your financial situation, will determine what personal property you are allowed to retain. Additionally, the retention of large assets, such as your automobile and your home, is determined by these considerations.
Write down a list of every debt you have. You’ll need to know all your debts to file for bankruptcy. Include your exact balance on each account. Take your time during this process; don’t rush and make sure all of your figures are correct.
Choose a bankruptcy attorney carefully. Many novice lawyers get their feet wet with personal bankruptcy cases. The lawyer you choose will need to be experienced and licensed. Information on lawyers and their ratings by clients can be found on the Internet.
Some attorneys offer a phone service for free where creditors will be referred to when they wish to contact you regarding an account that’s delinquent. All you have to do is give the creditors this number. Then, they can call this number to confirm you are actually going through bankruptcy. They will stop calling you at this point, and you will be able to answer your phone without fear.
If, once you file Chapter 7 bankruptcy, it comes to light that you no longer qualify to receive the Homestead Exemption,it may be possible for you to do a Chapter 13 filing on top of your mortgage. In some situations it might be better if you convert the whole Chapter 7 bankruptcy into Chapter 13. In this case, you should consult with your attorney to decide on your next step.
No one is happy to be bankrupt; sometimes it is the only option. You should now have some excellent advice from people who have personally struggled with the bankruptcy process. You will find this experience less difficult knowing that others have done it before you and survived by following these tips.
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