Nobody is enthusiastic about filing for bankruptcy, but sometimes it is simply the right financial choice. This decision may not be easy, but it is comparatively easier when you know what the process entails and how to navigate it. Ahead, you will find information from others like yourself, who have struggled with bankruptcy and its effects.
Do not consider paying off tax debt with credit cards and filing for bankruptcy afterward. It won’t work. Generally speaking, taxes are not a dischargeable debt. The delays caused by this sort of tactic could leave you owing the IRS a great deal in interest and penalties. In most cases, you can use the adage that “a dischargeable tax is a dischargeable debt.” Thus, it doesn’t make sense to use a credit card when it is going to be discharged when you file for bankruptcy.
When it appears likely that you will file a petition, do not start spending your last remaining funds on debt repayment. Avoid touching your retirement accounts whenever possible. Although you may need to tap into your savings, you should not use up all of it right now and jeopardize the financial security of your future.
Check the accuracy of all information before it is filed. Don’t just assume that the attorney will remember it automatically. Be as open as you can be to make sure your bankruptcy goes as well as possible.
Before you file for bankruptcy, find out which of your assets will be exempt from seizure. The Bankruptcy Code includes a list of the types of assets that are exempt from the bankruptcy process. Make sure that you carefully look over this list prior to filing to discover if your valuable assets will be seized. You may find yourself unpleasantly surprised when the things you value the most are taken from you without warning. This is why it is very important the familiarize yourself with this list.
Stay abreast of new laws that may affect your bankruptcy if you decide to file. 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. To know what these changes are, go to your state’s website or contact the legislative offices.
Protect your home. Filing for bankruptcy does not mean you have to lose your home. You could keep your home; it depends on your home’s value or if a second mortgage is on your home. There are also homestead exemptions which, depending on your other finances, may allow to remain in your home.
Chapter 13
Learn what you can about Chapter 13 bankruptcies. Chapter 13 bankruptcy is a good choice for people whose unsecured debts amount to lower than $250,000 and who receive a regular income. This lets you keep any real estate and personal property while you repay all your debts through a consolidation program. This lasts for three to five years and after this, your unsecured debt will be discharged. 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.
Do not forget to be around those you love. Going through bankruptcy is difficult. Not only is the process long, but it can be stressful, and many people feel ashamed when they do it. Many people decide to hide away from the world until the process is over. You shouldn’t do this, though, as staying away from the world can amplify any emotional issue you are having, and they could even morph into full-blown clinical depression. Spend time with your family, talk about your problems and find things that relax you.
Look at bankruptcy as a chance to mature and take responsibility for your personal finances. Often, with bankruptcy, come feelings of guilt, shame and worthlessness. These feelings do not help you and provide no value. If you are filing for bankruptcy and you are thinking negatively about the situation, make an effort to stop that now.
Nobody wishes to file for bankruptcy, but there are cases where it is simply necessary. 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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