No one ever thinks that they will go through a bankruptcy. Sometimes there is simply no viable alternative in a given financial situation. This is when it’s important to understand the basics of bankruptcy. If you are approaching a bankruptcy situation, reviewing the advice presented below may help you understand what happens next.
The primary catalyst for filing personal bankruptcy is having a large amount of debt that can’t be readily repaid. If you find yourself going through this, you should know all about the laws that are in your state. Different states use different laws when it comes to bankruptcy. Your house is safe in certain states; however, in other states, it isn’t. Be sure to have some familiarity with the law in your jurisdiction.
Instead of jumping into a bankruptcy filing, be sure your situation requires it. Alternatives do exist, including consumer credit counseling. Before you take the drastic move of filling for bankruptcy and living with a long lasting bad credit history, make sure to consider using another way that may not be as damaging to your credit.
When you document your financial records, it is vital that you are 100% truthful in order to have a successful resolution to your bankruptcy process. It is vital that you disclose all information about your assets and income so there are no delays or penalties, such as a court barring you from filing again later in the future.
When it comes to informing your attorney about your case, don’t be fearful. You should not take for granted that your lawyer will remember every important detail that you have have told him earlier without a reminder. Don’t be afraid to speak up, as it is your case and your future will be affected by its outcome.
Know and understand the difference between filing for Chapter 7 bankruptcy versus Chapter 13 bankruptcy. Take time to research this online and see the pros and cons for filing each one. 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.
Think about all your options before pulling the trigger. 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. If foreclosure is imminent, see if your loan can be altered at all through a modification plan. The lender can help your financial situation by getting interest rates lowered, dropping late charges, and in some cases will allow you to pay the loan over a longer period of time. Ultimately, creditors want their money, and many times repayment plans are preferable to a debtor that is bankrupt.
Chapter 7
Before you make the decision to file Chapter 7 personal bankruptcy, take time to think about anyone it could affect. When you file under Chapter 7, you will no longer be legally responsible for any debts that were signed by yourself and a co-debtor. Although, your creditors may insist that the co-debtor pay off the entire debt.
During a Chapter 13 bankruptcy, you may still be able to get a mortgage or car loan. This is a lot harder. You have to meet with your trustee to get approval for the new loan. Create a budget and prove you can afford a new loan payment. You also have to prepare yourself to explain the reasons you need to buy the item.
Some people don’t know that bankruptcy can actually help your credit more than making late or no payments to your creditors. Bankruptcies can remain on your credit reports for 10 years, you can jump right into repairing your credit. A fresh start is a great benefit of bankruptcy.
Before filing for bankruptcy, it is important to still be smart with your finances. It is especially important to refrain from taking on any new debt before filing. Judges and creditors consider current history, as well as past history when adjudicating personal bankruptcy. Every little bit of good financial behavior helps, so you should behave as responsibly as possible prior to filing.
Obtain copies of all credit reports about six months after the bankruptcy petition has been approved. Check that your reports accurately reflect all your closed accounts and discharged debts. If you find any discrepancies, immediately follow up on them so you can continue to repair your credit.
Make sure that your debts are dischargable under bankruptcy. Debts like student loans will stay on your credit report no matter if you file or not. For these kinds of debts, you can consult loan consolidation services or credit repair agencies. These services will help you manage and reduce your debts.
There are others online who have had to file bankruptcy just like you, so seek them out and talk with them if you start feeling low over your situation. There is a lot of stress associated with bankruptcy, and it can be hard to connect with your friends while you’re going through it. By finding others online who can relate to your situation, you will have a strong support system to get through the tough times.
You should understand that you need to speak with a bankruptcy attorney about what you should and should not do when it comes to bankruptcy. When you are properly informed, you make the whole process easier for yourself. This article has provided much of that information, so that you can approach your finances in a less stressed state of mind.
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