The mere thought of bankruptcy is enough to strike fear into the hearts of people. Similarly, mounting debt and the inability to sufficiently support oneself and family is another very real fear. If any of this frightens you, or you’re currently living this particular nightmare, then the contents of this article are going to prove of good use to you.
Once a person’s debts outstrip his or her ability to repay them, bankruptcy may be the only option left. If this describes your situation, it makes sense to become familiar with relevant laws. Bankruptcy laws vary from state to state. In some areas, your residence may be completely exempt, but in others, it will not be. Be sure you educate yourself on local laws prior to filing.
Dischargeable Debt
Do not try to get clever by paying your taxes via credit card before you declare bankruptcy in an effort to dodge your tax burden. In most states, this is not dischargeable debt. Therefore, you will end up owing the IRS a lot of money. A common rule is that dischargeable tax means dischargeable debt. This means using a credit card is not necessary, when it will just be discharged.
Before you file for bankruptcy, carefully consider if it is the right option for you. Other available options include consumer credit counseling. Bankruptcy will leave a permanent scar on your credit report and before you take this huge step, you should search through every available option first, to help try and limit the damage to your credit.
After filing for bankruptcy, you may have difficulty getting approved for unsecured credit. If you are in this situation, applying for a secured card may be the answer. By doing this, you will be letting people know that you want to fix your credit score. It will take time, but when creditors see a pattern that satisfies their need to see your good faith with payments, you will then be able to apply for unsecured cards.
Try to get a bankruptcy lawyer that your friends recommend, as opposed to someone that you find from the Internet or yellow pages. There are way too many people ready to take advantage of financially-strapped individuals, so you must ascertain that your attorney can be trusted.
Do not give up hope. When you file for bankruptcy you may be allowed to recover property like your car, electronics or jewelry that might have been repossessed. You should be able to get your possessions back if they have been taken away from you within 90 days before you filed for bankruptcy. Consult with a lawyer who is able to assist you in the filing of your petition.
Stay abreast of new laws that may affect your bankruptcy if you decide to file. Bankruptcy law has changed substantially in recent years, and therefore you must understand how such changes may affect your situation. Your state’s legislative offices or website will have up-to-date information about these changes.
See if there is an alternative you can use before declaring bankruptcy. For example, consumer credit counseling programs can help if your debt isn’t too large. Sometimes you can negotiate a reduced payment, though you must strive to get it all in writing.
Make certain that you comprehend the differences between Chapters 7 and 13. If Chapter 7 is what you file, your debts will get eliminated entirely. All of your financial ties to the people you owe money to will disappear. Chapter 13 is different, though. This type of bankruptcy entails an agreement to pay off your debts for five years prior to wiping the slate clean. In order to choose the right bankruptcy option, you need to know the differences between these kinds of personal bankruptcy filings.
Many bankruptcy lawyers offer free consultations, so go to several before choosing one. Just be sure that the person you speak with really is the lawyer, rather than a paralegal, since they cannot legally give advice. Comparing different lawyers makes it possible to find one with whom you work well.
You can take steps to hang onto your house. Bankruptcy doesn’t always mean you’ll lose your home. There are mitigating factors, such as lose of value, or multiple mortgages. You should also examine the possibility of taking a homestead exemption. This could apply if your income falls below the financial threshold.
Put forth the effort to grasp the distinctions between Chapter 7 and Chapter 13 bankruptcies. Do some research about these options so you can choose the best one. 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.
When you are looking at a Chapter 7 personal bankruptcy, you may well have debts to worry about for which you share responsibility with another person, such as a spouse, family member, or business partner. Speak to an attorney or read the bankruptcy laws in your state to find out if certain loans can be excluded from your filing. Although filing for bankruptcy excludes your from financial responsibility, co-signers will still be expected to pay the loan amount in full.
When you are going through bankruptcy proceedings, it is sure to cause a great deal of stress. The best way to lessen this stress is to employ a lawyer, who can handle most of it for you. Don’t hire based solely on cost. You do need someone who is costly, just someone who is good at what they do. Look to the bureau for better business, consultation, as well as others who have formerly experienced bankruptcy for more information about lawyers. It is even possible to watch a court hearing in order to see how well an attorney handles a case.
Many people are frightened by bankruptcy, and for good reason. Filing for bankruptcy can be a very stressful and fearful experience, especially if you don’t know what you’re doing. While it may have frightened you previously, you should fear bankruptcy no longer after reading this article. You can improve your life and safeguard your family by following the personal bankruptcy advice presented here.
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