Most people do not think they will ever need to consider filing for bankruptcy. Life can change in an instant, which can cause bankruptcy to be your only choice. Therefore, knowing how you can deal with this is vital. If you discover that you are faced with bankruptcy, you can help yourself with the knowledge provided below.
Be certain to gain a thorough understanding of personal bankruptcy by using online resources. The United States Department of Justice and American Bankruptcy Institute are two such places to look. The more you know, the better equipped you’ll be to make the wise decisions needed for a successful bankruptcy.
Credit Card
If you are considering using credit cards to pay your taxes and then file for bankruptcy, you may want to rethink that. In many areas of the country, this debt will not be dischargeable, and you could be left owing a significant amount to the IRS. Keep in mind that if the tax debt is eligible to be discharged, then the credit card debt is also dischargeable. Therefore, you should not pull your credit card out for purchases if it is just going to be discharged during the bankruptcy.
Before you file for bankruptcy, carefully consider if it is the right option for you. Other available options include consumer credit counseling. Bankruptcy stays on your credit for a whole decade, so if there are less drastic options that will solve your credit problems, it is in your best interest to make use of them.
Do not abandon hope. You can often have property returned to you. Autos, jewelry and even electronics that have been repossessed, could be returned. If the property you own has been repossessed under 90 days before the bankruptcy filing, you may still be able to get it back. Consult with a lawyer who can advise you on what you need to do to file a petition.
Be sure your home is well protected. Losing your home is thought of as common in bankruptcy cases, but it is by no means inevitable. Whether you get to keep your home depends on a few things, including its value and whether you have debts like a second mortgage or HELOC. You could also check out the homestead exemption. This lets you continue living in your house, depending on whether you meet certain financial requirements.
Be sure you have no other choice but to seek bankruptcy. Some people have great luck with handling debt with debt consolidation, which means taking out only one loan to pay off many loans. Declaring bankruptcy is a very involved process that can cause a good deal of anxiety. You should be aware that there are some negative ramifications to it, like extreme damage to your credit score. Personal bankruptcy should be undertaken as a last resort when no other workable options are available to you.
Chapter 13 Bankruptcy
Consider filing a Chapter 13 bankruptcy. If you are receiving money on a regular basis and your unsecured debt is under $250,000, you may be able to file Chapter 13 bankruptcy. 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. Just know that missing one payment could cause your case to be dismissed.
Look at all the alternatives to bankruptcy before filing. You may qualify for alternatives such as debt repayment plans or interest rate reductions. Ask your bankruptcy attorney about these options. For example, if you are in talks of foreclosure, you could use a modified loan to overcome your debt. Your lender can adjust your loan in many ways including extending the time you have to pay, reducing your interest rate, or canceling some of your late fees. When all is said and done, creditors want their money and find repayment plans preferable to not getting paid at all.
Filing Process
Do not forget to enjoy life a little once you get through the initial filing process. The filing process is extremely stressful for a lot of the people who go through it. If you let the stress get to you you may get depressed if you’re not doing the proper things to fight it. Life will get better after you finally get this situation over with.
Your trustee may be able to help you secure an auto loan or get a mortgage even though you have filed Chapter 13. It’s a bit more difficult, though. You will need to secure the trustee’s approval for any new debt obligation. Draft a personal budget to show that you will be able to repay your new loan. They may also want to know why you believe you need the loan.
Once you determine that claiming personal bankruptcy is something that you must do, you will need all the advice that you can get. The more knowledge you gain, the simpler the process becomes. This article has shown you much of this important information, and you can now face your financial situation in a calmer and less stressed manner.
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