If you were unfortunate enough to have your property repossessed by the tax man, you should probably consider bankruptcy. Bankruptcy will hurt your credit, this is true. However, it may be the only viable option available to you. Continue reading for more information about how and why to file for bankruptcy.
Take the time to find a simpler solution to your financial issues, before filing for bankruptcy. For example, you may want to consider a credit counseling plan if you have small debts. 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.
Protect your house. Filing for bankruptcy does not mean you have to lose your home. For instance, if your home value has dropped recently, or even if you happen to hold a second mortgage, you may not necessarily lose the home. Otherwise, look into the homestead exemption which may allow you to stay in your home if you meet financial threshold requirements.
Make sure you know how to differentiate between Chapter 13 and Chapter 7. Get a good grasp of the pluses and minuses each type of filing involves by researching both of them extensively. If you don’t understand the information you researched, consult with your attorney about the details before you decide which type of bankruptcy you want to file.
Chapter 13
Learn what you can about Chapter 13 bankruptcies. You are eligible for filing bankruptcy under Chapter 13 if you work and owe less than $250,000. Chapter 13 bankruptcy permits you to remain the owner of your properties, while allowing you to repay your debt using a debt consolidation loan. This repayment period usually lasts from three to five years. If you make your payments faithfully during that time, any remaining unsecured debt will be eliminated. Stay mindful that should you for any reason miss even one plan payment, your whole case is going to get thrown out by the court system.
Filing for bankruptcy is not the best choice if your monthly income is enough to cover your bills. Sure, bankruptcy can get rid of that debt, but it comes at the price of poor credit for 7-10 years.
Filing for bankruptcy should not be done on a whim. Before filing, talk with an attorney who can help you weigh all of your options. If you are looking at foreclosure, think about a loan modification program. This type of plan allows your lender to work with you eliminating charges, extending your loan, and lowering interest rates to help you pay back the loan without drowning in debt. When all is said and done, the creditors want their money, so sometimes it’s best to deal with a repayment plan than with a bankruptcy debtor.
Chapter 7
Before going through the Chapter 7 filing process, ensure that your co-debtors are abreast of any implications relating to this process. When filing Chapter 7, you are not legally responsible for the debts in your name. However, your creditors will be able demand that your co-debtor pays the debt off in full.
Do not think of filing for personal bankruptcy as a shameful thing. For many people, bankruptcy is a source of guilt and feelings of worthlessness. These are useless emotions, however, and can be harmful to your mental state. Keeping a positive attitude during worrisome financial trouble is the smartest way to deal with a bankruptcy.
Before you file for personal bankruptcy, take great care in paying off your debts. You may find that bankruptcy law prohibits you from paying back some types of creditors for 90 days before you file, and a year for family members. Study applicable regulations prior to making any financial choices.
Know that bankruptcy in the end may be your best bet for restoring your credit, as opposed to the continuous pattern of missing or making late payments on what you owe. Although your credit will take a big hit, you can begin to repair it immediately after filing bankruptcy. Getting a fresh start is one benefit of bankruptcy.
Before you file make sure that you are not doing anything to bring yourself in debt any more. Do not take on more debt or use more of your current credit. Creditors and judges look at your current and past financial history when they make a decision about your personal bankruptcy. What responsible behavior will ultimately demonstrate is that you’re on the right path. The longer you’re able to show this, the more seriously you’ll be taken by creditors.
When you file for bankruptcy, you want to be certain that your papers include every debt that you need to get discharged. If you do not document certain debts, they aren’t going to be on the discharge. You must ensure that all essential data is recorded in order to guarantee that every debt is included in your discharge.
As mention earlier, you always have the option to file for bankruptcy. But, filing ought not to be an automatic decision, as it does have serious implications. Don’t sit back and let the process take control of you. Take control of the process by doing your research so that you don’t lose more than you need to.
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