Filing for bankruptcy is a very important decision and one that shouldn’t be taken lightly. Go over the advice in the following paragraphs to get an idea of what you’re in for, and to learn what you should know before you decide whether or not to file. It’s important that you gather as much info as possible before filing.
Think through your decision to file for bankruptcy carefully before going ahead with it. Look into credit counseling to see if it could help you work out of your debt without bankruptcy. 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.
Never shirk on the truth in your petition for bankruptcy. Don’t hide income or assets from your lawyer or the bankruptcy trustee or you may find yourself in legal trouble.
Use a personally recommended bankruptcy attorney instead of one found through the Internet or phone books. There are way too many people ready to take advantage of financially-strapped individuals, so you must ascertain that your attorney can be trusted.
Research what assets are exempt from seizure before you decide to declare bankruptcy. To find an itemized list detailing assets exempt from bankruptcy, find the Bankruptcy Code. Make sure that you carefully look over this list prior to filing to discover if your valuable assets will be seized. If you aren’t aware of this, you could lose some assets that you value.
Don’t hide assets or liabilities when filing for bankruptcy. Penalties may include fines, imprisonment or denial of the filing. Never hide anything, and make sure you come up with a well devised plan for dealing with bankruptcy.
Be aware of recent changes, if any, in the bankruptcy code. Bankruptcy laws are in constant flux, so just because you knew the law last year doesn’t mean that the laws will be the same this year. Your state’s legislative offices or website will have up-to-date information about these changes.
Chapter 7
The two main kinds of bankruptcy are Chapter 7 and Chapter 13. Make sure you understand them so you know what is best for you. Should you choose Chapter 7, your total debt load will be erased. This includes creditors and your relationship with them will become no longer existent. 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. When choosing the type of personal bankruptcy that is correct for you, it is very important that you know the differences.
Protect your home. There are many options available to help protect you from losing your home. If your home has significantly depreciated in value or you’ve taken a second mortgage, it may be possible to retain possession of your home. If you’re not sure, however, you can always study the particular homestead exemption regulations. You will learn everything you need to know.
Make sure that you really need to file for bankruptcy. Maybe you can just consolidate debt to make it simpler to deal with. Filling for bankruptcy is a lengthy, stressful process. It will certainly affect the credit rating that you have in the future. This is why you must ensure that bankruptcy is the only option left for you.
Learn what you can about Chapter 13 bankruptcies. If you currently have some income and don’t have more than $250k in debt, you can declare bankruptcy. Filing a Chapter 13 will let you keep personal items and real estate while you pay down your debt in a consolidation plan. That plan lasts approximately three to five years, and then you are discharged from unsecured debt. Just know that missing one payment could cause your case to be dismissed.
If your earnings are higher than your expenses then filing for bankruptcy is a waste of time and money. Understand that while declaring bankruptcy will eliminate many of your debts, you will have difficulty obtaining credit and will pay more in interest for the credit you do receive for at least seven years.
Filing bankruptcy under Chapter 13 means you can still get a loan for a car or a mortgage. There will, however, be obstacles. Your trustee must approve any new loans. Present a planned budget that shows how you can take on the loan payment and stay current. Also, be sure you can provide an explanation as to why this purchase is necessary.
It is important to not wait for the final minute to petition for bankruptcy. What a lot of people do is ignore the fact that they are in a financial crisis and think that their debt is not going to catch up to them. Debt can snowball very fast, and by ignoring it, you increase the chances of worse problems, such as foreclosure and wage garnishments. Speak with a bankruptcy lawyer as soon as you become aware that you cannot handle your debts.
Bankruptcy will erase debts. Don’t create any new debts before filing for it. This fraudulent practice is a demonstration of bad faith. Debts you incur this way will likely not be discharged in a bankruptcy, and you will still have to repay them.
When thinking about filing for bankruptcy, it is best not to waste precious time. It is difficult to admit that you are in over your head financially, but waiting will just make the problem worse. If you are not sure, gather all of your information and spend a little time speaking with a bankruptcy attorney; their experience can help you make the right decision.
You should know by now that bankruptcy does not just pop up out of nowhere. Many things have to be done properly. If you follow the advice given here, you’ll be able to make sure you have everything in order for when you file bankruptcy.
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