Although it is sometimes needed, deciding to file for bankruptcy is hard. This situation is handled best when you know what to expect and have information about what to do. Continue to read this article to learn what has helped others who have filed for bankruptcy.
If you are considering using credit cards to pay your taxes and then file for bankruptcy, you may want to rethink that. Most of the time, you cannot discharge this debt. As a result, you will owe the IRS a lot of money. Remember that if you can discharge the tax you can discharge the debt. So it does not help you to put the tax bill on your charge card if you know the debt will be discharged anyway.
Make sure you are always providing honest documentation whenever you have to file for personal bankruptcy. Lying on your filing can cause dire consequences such as: delays, penalties, being prevented from re-filing, or even jail time.
Prior to putting in the bankruptcy paperwork, determine what assets are protected from seizure. There are several assets which are exempt from bankruptcy; therefore, consult the Bankruptcy code. It is vital that you know the things on this list prior to filing for bankruptcy, in order to determine which of your possessions will be taken away. If you fail to do so, things could get ugly.
Chapter 7
Remember to understand the differences between Chapter 7 bankruptcy and Chapter 13 bankruptcy. All debt will be eliminated with Chapter 7. All happenings with creditors will disappear. If however you enter Chapter 13, you will go into a five year repayment program prior to your debts dissolving entirely. It is vital that you know the differences between these types of bankruptcies, in order to find the option that’s best for you.
Do not file for bankruptcy if your income is greater than your bills. Although bankruptcy might seem to be an easy way of being able to pay for your debts, you must remember that it is something that will remain roughly about 7 to 10 years in your credit report.
Before declaring bankruptcy, see if there’s anything less drastic you can do to repair your credit. For example, you can always talk with a lawyer to see about different options through creditors or other means that will not require wiping the entire slate clean. Loan modification plans on home loans are a great example of this. 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. Creditors would rather be repaid, however slowly, than have you declare bankruptcy.
Don’t forget to enjoy your life once your finances get fixed. It’s not uncommon to be overwhelmed by the filing process. You do not want to have to deal with depression in addition to your financial troubles, so you should take steps to keep yourself happy. Life is going to get better once you get through this.
Chapter 7
If you have a co-debtor, consider the ramifications that filing a Chapter 7 bankruptcy will have. You will be freed of responsibility for debts that you share if you make a successful Chapter 7 filing. Although, your creditors may insist that the co-debtor pay off the entire debt.
Chose the proper moment to make your move. Timing is very important when it comes to personal bankruptcy filings. Sometimes you should file immediately; however, there are times when it is better to delay until the worst has passed. Discuss the strategic timing of your bankruptcy with your attorney.
Don’t wait till it’s too late to file for bankruptcy. What a lot of people do is ignore the fact that they are in a financial crisis and think that their debt is not going to catch up to them. All your personal debts will easily go haywire, building and collapsing very quickly. This often leads to foreclosures and garnishments. As soon as you know that you are too far over your head, make the move to call an attorney skilled in bankruptcy court, to weigh your options.
In difficult financial situations, filing for bankruptcy is sometimes unavoidable. Now, equipped with the information from this article, you can handle the process much more completely. Spending some time learning for others who have gone through the same thing reduce some of your stress.
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