If you have been put into the position of needing to file for bankruptcy, you are likely not to be very happy about it, but it does not lead to your life ending. The main purpose is to give yourself a fresh, new start in life. Keep reading to handle the bankruptcy process in a way that is a rebirth and not a financial Armageddon.
Millions of Americans file for bankruptcy each year because they can not pay their bills. If you are in this position, you need to be familiar with the laws in your area. Every state is different when it comes to dealing with bankruptcy. Some states protect your home, and others do not. Be aware of bankruptcy laws before filing your claim.
Instead of jumping into a bankruptcy filing, be sure your situation requires it. There are other options available, such as credit counseling for consumers. Bankruptcy has a negative effect on your credit reports, in that it is permanently there. Before you take this step, make sure all your options have been considered.
If you are thinking about paying off your tax obligations with a credit card and then filing bankruptcy, think again. Most of the time, you cannot discharge this debt. As a result, you will owe the IRS a lot of money. Generally speaking 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.
When you feel certain that you must file for personal bankruptcy, refrain from squandering your life savings to pay off unsecured debt. Avoid touching your retirement accounts whenever possible. Using your savings is necessary, but decimating it and leaving yourself dangling with no future financial security is not a good idea.
Personal Bankruptcy
Find a specialized lawyer if you are thinking about filing for bankruptcy. Personal bankruptcy is quite complex, and it is entirely possible that you will not be able to familiarize yourself with all the laws and processes. Personal bankruptcy attorneys can help make sure everything is done properly.
Be honest when filing for bankruptcy. Don’t hide liabilities or assets, as they’ll come back and haunt you. The lawyer representing you when you file needs to have full knowledge of your financial situation. Don’t hold anything back and formulate a smart strategy to deal with the reality you are facing.
Be sure you have no other choice but to seek bankruptcy. Consolidation could be the avenue you need to get your finances back in order. Bankruptcy cases are long, anxiety-filled experiences. Credit will be much harder for you to come by after you file for bankruptcy. Because of this, you should be sure that bankruptcy is your only option before you file.
Once you clear the hurdle of filing for bankruptcy, live a little, but not too much. Many people who undergo this process become way too stressed out. Depression can ensue from the stress if action isn’t taken. Bankruptcy is hard to go through, but you must remember that a less stressful, more enjoyable life is waiting on the other side of it.
Find out about lowering the cost of the payment you pay monthly on your car, if you are afraid of losing it. It is possible to get your car payment lowered if you file using Chapter 7. The vehicle must have been obtained more than 90 days before filing and be a loan with high interest. You must also have consistent work history.
Familiarize yourself with the bankruptcy code before you file. Bankruptcy laws change a lot and before making the decision to file, you need to know what you are getting yourself into. To learn about these changes, try contacting your state’s legislation office or checking their website.
Chapter 7
Before you make the decision to file Chapter 7 personal bankruptcy, take time to think about anyone it could affect. You will be freed of responsibility for debts that you share if you make a successful Chapter 7 filing. Although filing for bankruptcy excludes your from financial responsibility, co-signers will still be expected to pay the loan amount in full.
Don’t let shame consume you during the bankruptcy process. Bankruptcy can sometimes leave people feeling guilty, ashamed and alone. Wallowing in these emotions benefits no one, and only serve to harm your own mental health. A good way to deal with bankruptcy is to make sure that you keep a stiff upper lip.
Consider other alternatives before filing for bankruptcy. For example, if your debt is small, try a type of consumer counseling program. You may also find success in negotiating lower payment arrangements yourself, but be certain to get any arrangements with creditors in writing.
Filing for bankruptcy does not mean that you lose all of your assets. You can often keep personal property. Whether jewelry, furnishings, electronics and even clothes – these items can be protected. This depends on the laws in your state, the bankruptcy type for which you file, and your unique finance situation, but it may be possible to retain your home, car and other large assets.
If you think bankruptcy is an option, you will need to hire a bankruptcy attorney. Skilled lawyers have the ability to counsel you on whether you ought to file for bankruptcy and can also handle court appearances. A lawyer will be able to file and fill out all of the necessary paperwork, as well as answer any questions that you may have.
Be sure that you include all debts you want discharged in your bankruptcy filing. Any debts that you leave off of your paperwork will be left out of the final discharge. You should have everything in writing with dates and signatures to prove that your debts have been discharged, or you could be asked to pay these debts.
Be certain that you can differentiate between Chapter 7 and Chapter 13 bankruptcy. Under Chapter 7 type bankruptcy, all debts are forgiven. This type of bankruptcy ends any relationship you might have with creditors. If you choose to file for Chapter 12 bankruptcy, you’ll be put into a 60-month plan for repaying your debts before they’re eliminated. In order to choose the right bankruptcy option, you need to know the differences between these kinds of personal bankruptcy filings.
Even if you start a new job prior to declaring bankruptcy, do not change your plans! Filing for bankruptcy may still be the best way forward for you. The timing of your bankruptcy is important. If your filing is done before you earn a new income, you can calculate repayment means without taking that into account.
Some attorneys have a free phone service where creditors can be referred when they try to contact you in regards to a delinquent account. You can just give them the number and they can call for confirmation that your debt is indeed part of a bankruptcy. They will stop calling you at this point, and you will be able to answer your phone without fear.
If you’re going to hire a lawyer you have to pick one that’s experienced with bankruptcy. There are a plethora of law firms that you could work with. The inexpensive lawyers will probably fail in the knowledge department. Avoid the temptation to jump on board.
Make time to visit with family and friends during the bankruptcy process. Going through a bankruptcy is never easy. It’s generally stressful, lengthy and can make people feel guilty, ashamed, and unworthy. Lots of people choose to disappear for a while until the entire process is over and done with. However, becoming a hermit will only increase feelings of self-doubt and could make you depressed. Thus, you must keep living your life and socializing with those you love, no matter what is going on with your bankruptcy.
As you read in the beginning of this article, bankruptcy is not something anyone looks forward to. That said, filing for bankruptcy can be a positive turning point in your life. In fact, if you apply the ideas and advice given in this article, you can truly make bankruptcy a turning point in your life towards better days.