These days, the word “bankruptcy” is about as common as the word “the.” There are many who recognize the role the economy has played in this epidemic. Prior to making the decision to file a petition, you need to have a thorough understanding of the topic so that you act in your own best interest. The following tips are going to help clarify some bankruptcy confusion for you.
Do not pay your taxes with credit cards that will be canceled when you file for bankruptcy. In a lot of places, the debt cannot be discharged, and you may still owe money to the IRS. A common rule is that dischargeable tax means dischargeable debt. So as you can see, in this situation there is no need to use the card when the debt will be discharged when you file for bankruptcy.
If you are going through a bankruptcy do not fall victim to guilt and pay off debts that you do not need to pay. You shouldn’t dip into your IRA or 401(k) unless there is nothing else you can do. If you have to use a portion of your savings, make sure that you save some to ensure that you are financially secure in the future.
You might experience trouble with getting unsecured credit after filing for bankruptcy. Since it is important that you work to rebuild your credit, you should instead think about applying for a secured card. This will be a demonstration of the seriousness with which you view rebuilding your credit rating. After using a secured card for a certain amount of time, you might be offered an unsecured card once again.
See if there is an alternative you can use before declaring bankruptcy. For example, there are credit counseling services that can help you to deal with smaller amounts of debt. 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.
Learn about teh differences between Chapter 13 and Chapter 7 bankruptcy. Research both types of bankruptcy online, and weigh the positives and negatives each would offer you. If the information you read is unclear to you, take the time to go over the specifics with your lawyer before making a decision on which type you will want to file.
Once you have completed the bankruptcy filing, you should take time to do something you enjoy. It’s not uncommon to be overwhelmed by the filing process. This kind of stress can take a heavy toll on your personal life, especially if you are not making any efforts to adopt a positive attitude. Once the process is complete your life will improve.
Keep in mind that filing for Chapter 7 bankruptcy may affect other people than just you, including family members, and in some cases, business associates. When you file a Chapter 7, your debts will be dissolved. However, if you had a co-debtor, they will be required to pay the debt.
If you decide to file for bankruptcy, it’s important that you’re educated about your rights. Many creditors or bill collectors might tell you your debts cannot be included in a bankruptcy. Only a few debts, including child support and tax liens, are ineligible for bankruptcy. If a bill collector attempts to say their bill cannot be discharged, look it up. If they are wrong, report them.
Don’t wait until it is too late to file for bankruptcy. It is a mistake to ignore your financial troubles, hoping they will go away on their own. It doesn’t take long for debt to become unmanageable, and not taking care of it could eventually lead to wage garnishment or foreclosure. Once you realize that the debt you have is too much for you to handle, start thinking about talking to a bankruptcy attorney, they can guide you throughout the entire process.
Prior to filing, it is important that you know all about bankruptcy laws. Did you know that in some areas, you cannot transfer assets from yourself to another person in the year previous to filing occurring? It is also against the law to max out your credit cards before filing for bankruptcy.
Make a list of all your debts before filing. Neglecting to include the smallest of detail can lead to a petition being dismissed. Even small amounts of money contribute to your overall financial picture, so do not exclude them. Financial information should include all income, assets and loans.
If you know that you are about to file for bankruptcy, don’t exploit the information asymmetry and get huge cash advances on your credit cards. Not only is this fraud, but you could still be liable to repay the money at the end of the day.
In conclusion, bankruptcy is common these days, many times because of the way the economy is. By following the advice presented here, you can make sound decisions in regards to your relationship with personal bankruptcy.