Filing for personal bankruptcy protection is an important strategy for people that have had assets, such as their vehicle, seized by the IRS. Bankruptcy can have a major effect on credit; but, at times, is the only choice. The advice below will provide you with all the information you need to understand the results of choosing to file for bankruptcy.
Credit History
Before you file for bankruptcy, carefully consider if it is the right option for you. Other available options include consumer credit counseling. Since your credit history will forever note the bankruptcy, you want to make sure that you have tried everything else before you take an action such as this, in order to minimize the effect it will have with regard to your credit history.
When bankruptcy seem inevitable it is important not to use your retirement funds or emergency savings to pay creditors. You shouldn’t dip into your IRA or 401(k) unless there is nothing else you can do. Although you may need to tap into your savings, you should not use up all of it right now and jeopardize the financial security of your future.
Make sure you keep reminding your attorney about any important details in your case. Don’t just assume that the attorney will remember it automatically. Ultimately, this is your bankruptcy and your financial future, so never hesitate to advocate on your behalf.
Unsecured Credit
You may still have trouble receiving any unsecured credit after a bankruptcy. In this event, you should attempt to apply for a secured card or two. That will show lenders that you are committed to rebuilding your credit. Unsecured credit may be offered to you quicker than you think after doing so.
Be completely honest whenever you file for personal bankruptcy. Hiding any asset or liability is a risk that will bite you in the end. Wherever you file, that court has to be made aware of all details regarding your finances, positive and negative. Bankruptcy can be a chance to simplify your finances, but any schemes you employ to conceal the truth can ruin that chance for you.
You should not have to pay for a consultation with a bankruptcy attorney. Make sure you ask lots of questions. Most lawyers offer free consultations, so talk to a few before making your decision. Therefore consult with different lawyers and get a feel for them, then decide which one suits your needs You do not have to give them your decision right after the consultation. You could even go to different lawyers for advice.
Brush up on the latest bankruptcy regulations before you decide whether or not to file. Bankruptcy laws are in constant flux, so just because you knew the law last year doesn’t mean that the laws will be the same this year. To stay up-to-date on these laws, check out your state’s government website.
Chapter 13
Chapter 13 bankruptcy might be a good option, so don’t overlook it. If you have less than a quarter of a million dollars in debt that is unsecured and a regular income, you are eligible to file a Chapter 13. That way, you can hold onto your personal assets and pay back a portion of your debts pursuant to an approved plan. Typically, any plan you develop will last around 3-5 years. Afterwards, any remaining unsecured debts will be discharged. Just know that missing one payment could cause your case to be dismissed.
Think about all the choices available to you when you file for bankruptcy. There are many other options including debt consolidation and making payment plans with your creditors. If a foreclosure is your reason for filing look into your options with your bank first, such as a loan modification. Some lenders will make concessions rather than losing the money owed to bankruptcy. These concessions include waiving late fees, lowering interest rates, and changing the loan term. Creditors want their money. Often, they are willing to work out repayment plans with you in order to get it.
After you have filed for bankruptcy, enjoy your life. The process of filing for bankruptcy can make people a nervous wreck. Stress easily leads to depression, if you are not maintaining control of your emotions. Once the process if over, your life will improve.
Chapter 7 Bankruptcy
If you have a co-debtor, consider the ramifications that filing a Chapter 7 bankruptcy will have. Debts that involved a co-signer can be discharged in Chapter 7 bankruptcy. Although, your creditors may insist that the co-debtor pay off the entire debt.
Do not think of filing for personal bankruptcy as a shameful thing. Feelings of low self-worth, shame and guilt are common for those who have come to the point where bankruptcy is their only option. Feeling like this will not help your situation and can actually do serious damage to your mental well-being. Having the right outlook during a tough financial upheaval is a great attitude in coping with bankruptcy.
Bankruptcy is a challenging time and can create a huge amount of mental and emotional stress. Look for a good attorney who can help you through the process. Do not let price be the only factor. The cheapest attorney may not be the best, but the most expensive may not be the best either. 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.
As stated previously in this guide, personal bankruptcy can always be an option. Of course, it may not be best for all situations and can even make your credit matters worse. Protect your assets and avoid even more stress by learning as much as you can before you decide to file.
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