Lots of people have to claim bankruptcy when their bills are larger than their income. If this is the case for you, you should begin to investigate the legislation in your state. Each state has its own laws regarding personal bankruptcy. For instance, some states protect you from losing your home in a bankruptcy, but others do not. See to it that you understand the bankruptcy laws in the area that you live prior to filing.
Filing for bankruptcy is always a bad thing. The embarrassment can be overwhelming when friends discover your poor financial position. Use the tips in this article to learn how you can avoid bankruptcy.
Consider all options before deciding to file for personal bankruptcy. You have other choices, including 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.
Do not consider paying off tax debt with credit cards and filing for bankruptcy afterward. It won’t work. In most states, you will still owe money to the IRS and have to take care of the interest of your credit cards. Rule of thumb is if the tax is dischargeable, then the debt will be dischargeable. Because of this, transferring the debt to your credit card is pointless.
Always remind your lawyer of specifics that are important to your case. Don’t just assume that the attorney will remember it automatically. Be as open as you can be to make sure your bankruptcy goes as well as possible.
The most important tip a person filing for personal bankruptcy can remember and follow is to be completely transparent in all dealings. Not only is hiding income and assets wrong, it is also a crime.
Before declaring bankruptcy, ensure that all other options have been considered. For example, if you only have a little bit of debt, you might be better off if you went through consumer credit counseling. Sometimes you can negotiate a reduced payment, though you must strive to get it all in writing.
If you can, get a word-of-mouth referral for a lawyer. Don’t allow yourself to be taken advantage of by predatory lawyers just because you are filing for bankruptcy. It is important to find someone trustworthy.
Remember to have fun with your life when you’re done with the filing process initially. Lots of debtors are stressed out when they’ve come to filing time. This stress could morph into clinical depression, if you fail to adequately address the problem. You are getting a fresh start, and things will get better.
You are going to get found out and get in trouble if you don’t disclose all your assets, so be totally honest from the beginning. The professional that helps you file for bankruptcy has to have a complete and accurate picture of your financial condition. Telling the truth will allow you reach a solution that is feasible, given your current situation.
Do not wait until things go from bad to worse before filing bankruptcy. Some folks ignore financial difficulties for a long time, and this can be disastrous. Yet you can have debtors come after you and potentially take your home if you are not handling your debts properly. As soon as you realize your debts far outweigh your income, call a bankruptcy lawyer to talk about what your choices are.
Watch how debts are paid off prior to filing. Bankruptcy laws generally don’t cover situations which occurred within a short time frame prior to filing, such as the previous 90 days worth of credit card debt. Before making important decisions in regards to your finances, be sure you understand the laws.
Remember to understand the differences between Chapter 7 bankruptcy and Chapter 13 bankruptcy. Chapter 7 eliminates all debts. Your former ties with creditors will cease to exist. Chapter 13 bankruptcy though will make you work out a payment plan that takes 60 months to work with until the debts go away. It is worth while to take your time to research both types of bankruptcy to decide which option works best for you, and your financial situation.
Lots of individuals who filed bankruptcy vow to never again use credit cards or lines of credit ever again. This is not wise because you need to rebuild a good credit file. If you aren’t using any credit, then it will be very difficult to get your credit score high enough to be able to purchase things like a car or home in the future. The best way to help build your credit is to get one credit card and pay it off at the end of every billing cycle.
Take steps to ensure your home is protected. Just because you’re going bankrupt doesn’t mean that you also have to be homeless! It depends what your home value is and if there is a second mortgage, as all this stuff comes into play when determining if you can keep the home. Otherwise, look into the homestead exemption which may allow you to stay in your home if you meet financial threshold requirements.
If you’re thinking of getting divorced, evaluate the financial consequences of doing so. Many people tend to get divorced and have to immediately file for bankruptcy due to not foreseeing future financial trouble. It’s a smart decision to reconsider getting a divorce.
Look into all of your options before you choose to file for bankruptcy. 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 looms, think about getting your loan plan modified. 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. Above all else, what creditors want is to get their money. Sometimes they would rather settle for a repayment plan instead of a debtor who is bankrupt.
Bankruptcy is never a way to avoid paying your fair share of federal taxes. Some filers pay the taxes that they owe with credit cards and then they file for bankruptcy. This is done with the hope of evading taxes by shifting the balance to a credit card account. This is illegal, however, and you will be stuck with the balance owed on your card, as well as the fees and interest that it accumulates.
If you’re concerned about the details of keeping your car, try to ask your attorney about details regarding lowering your monthly payments. You can often lower your payment using Chapter 7 bankruptcy. You must have bought the car 910 or more days before you filed, the loan must have a high interest rate, and you have to have a secure and steady working history in order for that to work.
Disclosing all of your debts to your lawyer is crucial, even personal loans. Although this would mean that you would be telling him information regarding credit card companies, lenders and hospitals, it also means that you would tell him any information about you owing money to friends and families.
As you can see, you do not have to resort to bankruptcy. Take the information provided here and avoid filing if at all possible. If you begin using the tips you learned right away, you will surely see a big change in your life, and perhaps you will be able to save your credit history.
Is a second employment position for you possible? Rather than filing a bankruptcy petition, speak with your creditors and let them know you want to make gradual payments over time. Most will accede to your wishes and prevent the filing of bankruptcy.