The Pros And Cons Of Considering Personal Bankruptcy

Bankruptcy can be tough. The number of options available to those with financial problems can be small. Despite a bankruptcy on your record and a dinged credit score, you can often still get loans if you need them.

Once a person’s debts outstrip his or her ability to repay them, bankruptcy may be the only option left. If this is the case for you, you should begin to investigate the legislation in your state. Every state has a separate law having to do with bankruptcy. In certain states if you file for bankruptcy your home remains protected, but the laws vary depending on where you reside. Do not file before learning about the bankruptcy laws in your state.

You may still have trouble receiving any unsecured credit after a bankruptcy. If you find yourself in this situation, you may want to think about getting a secured card or two. If you pay what you owe back promptly at all times, you can show that you are taking steps to be responsible about your payments and credit rating. In time, it may be possible for you to obtain unsecured cards.

Don’t throw in the towel. Certain property cannot be repossessed while you are in the process of filing for bankruptcy so be sure to learn about the laws in your state. You may be able to get your property back if fewer than 90 days have passed between the repossession and are filing for bankruptcy. A qualified bankruptcy attorney can walk you through the petition process.

Since the majority of attorneys are willing to provide no-cost initial consultations, it is smart to meet with more than one before you make a selection. Meet with the actual lawyer, not a paralegal or assistant, as they’re not allowed to give out legal advice. By meeting with several attorneys through a free consultation you will be able to choose which attorney you feel more comfortable with.

Always protect your house. Filing bankruptcy does not necessarily mean that you will lose your house. You might be able to keep your home, for instance, if you have two mortgages or if your home has lost its value. Another option is the homestead exemption that has certain income and financial requirements, but may also allow you to keep your home.

Credit Score

If your income exceeds your obligations, you should not seek bankruptcy protection. You should know that filing for bankruptcy will ruin your credit score for at least ten years and that improving your credit score will be expensive.

Before declaring bankruptcy, see if there’s anything less drastic you can do to repair your credit. A lawyer that specializes in bankruptcy law can help advise you of other options, such as repayment plans and reducing interest rates to relieve some of the burden. A plan that can be useful when foreclosure is looming is a loan modification. 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. Making arrangements with the creditors to make reasonable payments towards you debt is a much better plan than bankruptcy because the lender simply wants the loan repaid.

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. When filing for Chapter 7, you won’t be responsible legally for debt signed by co-debtors and yourself. Creditors, however, will hold the co-signer liable for the entire balance of the debt.

You can still take out a car loan or mortgage while you are in Chapter 13 bankruptcy. This is harder. You will be required to meet a trustee and be approved for a new loan. 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.

You now must realize that filing bankruptcy with not limit your life forever. When you save your money and show lenders that you are making serious efforts to reestablish your credibility they look kindly at this. You will see just how big of a difference saving a little money can make when you go apply for your next home or car loan.

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