Being in debt is far from fun, and it is even downright scary at times. In a quick amount of time, you can go from being in a tiny bit of debt to a situation that suddenly spirals out of control. If you’re not careful along the way, debt can be a complicated process to get out of. This article will help you identify some things you can do in regards to filing for personal bankruptcy once your debt levels have spiraled out of control.
Tax Obligations
If you are thinking about paying off your tax obligations with a credit card and then filing bankruptcy, think again. In most states, this is not dischargeable debt. Therefore, you will end up owing the IRS a lot of money. Remember that if you can discharge the tax you can discharge the debt. So using your credit card to pay off your tax obligations, then filing for bankruptcy, can actually hurt you instead of help you.
If you are faced with the choice of filing for bankruptcy or using your emergency fund or retirement accounts to pay creditors, opt to file for bankruptcy. Leave your retirement accounts untouched unless there is absolutely no other alternative. Using your savings is necessary, but decimating it and leaving yourself dangling with no future financial security is not a good idea.
Make sure you are always providing honest documentation whenever you have to file for personal bankruptcy. 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.
If you are meeting with a lawyer to discuss bankruptcy, the initial consultation should be free so ask every question you have. Most lawyers offer free consultations, so talk to a few before making your decision. Only choose a lawyer if you feel like your questions were answered. You do not have to give them your decision right after the consultation. That gives you the chance to speak to a number of lawyers.
If you’re filing for bankruptcy soon, be sure you are going to hire a lawyer. Personal bankruptcy is quite complex, and it is entirely possible that you will not be able to familiarize yourself with all the laws and processes. A lawyer that specializes in bankruptcy can make sure you are following the correct procedures in your filing.
Be sure to weigh all of your options before deciding to file for personal bankruptcy. For example, you may want to consider a credit counseling plan if you have small debts. You should also try negotiating a payment plan with your creditors; make sure you get a written agreement of the new payment plans.
Protect your house. Filing for bankruptcy does not always mean you will end up losing your home. You can still keep your home, it just depends on your specific situation and the value of your home. If this is not the case, find out more about Homestead Exemptions you might qualify for if you meet certain financial requirements.
Make sure you know how to differentiate between Chapter 13 and Chapter 7. Spend time researching the advantages and disadvantages of filing for each one of these. If you are confused by what you find, be sure to ask your attorney to explain anything that is unclear before you make your decision about filing.
Banish the word “shame” from your vocabulary before you file for bankruptcy. Feelings of low self-worth, shame and guilt are common for those who have come to the point where bankruptcy is their only option. Do not let these negative feelings influence your decision. If you want to cope with your bankruptcy filing successfully, you must maintain a positive point of view.
If you are considering bankruptcy, do not leave it until the last possible moment to do so. It is a big mistake to avoid financial problems, thinking they may go away on their own. Debt can snowball very fast, and by ignoring it, you increase the chances of worse problems, such as foreclosure and wage garnishments. As soon as you’ve decided that you no longer have a handle on your debts, consult a bankruptcy lawyer to see if bankruptcy is right for you.
Some things in life are inevitable. The above article has provided you with advice to allow you to handle your finances and deal with the option of bankruptcy. Apply the tips you learned from this article into your life.
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