When Is The Right Time To File Personal Bankrupcy?
Posted at by PConran on category BankruptcyDeciding to file for bankruptcy is not an easy decision to make; but, in some cases, it is necessary. Before filing for bankruptcy, it is important that you fully understand what it means and what is involved in the bankruptcy process. Keep reading for some solid wisdom from people who have themselves gone bankrupt.
Millions of Americans file for bankruptcy each year because they can not pay their bills. If you find yourself needing to file for bankruptcy it is important to familiarize yourself with the state laws. You will find that each state has their own bankruptcy laws. Your home is safe in some states, but in others it’s not. It is best to become familiar with your state’s laws regarding bankruptcy before you take the steps to file.
Don’t pay tax requirements with your credit cards with the thought of starting the bankruptcy process afterward, without doing your research first. Most places will not consider the debt dischargeable, meaning you will have to pay the IRS a lot of money. Keep in mind that if the tax debt is eligible to be discharged, then the credit card debt is also dischargeable. Just because your credit card could be discharged in bankruptcy does not mean you should use it.
Do not use your retirement fund or savings to pay off creditors. Retirement accounts should never be accessed unless all other options have been exhausted. If you do have to dig into your savings, make sure that you leave enough to sustain you and your family for a couple of months.
Use a personally recommended bankruptcy attorney instead of one found through the Internet or phone books. To handle your bankruptcy, you need a trusted attorney, not a shady one that is out to take your money.
Ask for a free consultation with your bankruptcy attorney and ask questions about experience and education. Most attorneys offer free consultations, so meet with a number of them before you retain one. Make a decision when all your concerns and questions have been addressed well by one lawyer in particular. You need not decide right away. You can take your time and check out several attorneys before making your final selection.
There are two types of bankruptcy filing, Chapter 7 and Chapter 13 so make sure you know the differences. Chapter 7 involves the elimination of all of your debt. You will no longer be liable for any money that you owe to your creditors. Chapter 13, on the other hand, involves a five year payment period before any remaining debts are cancelled. It’s imperative that you know the differences among the various categories of bankruptcy so that you are able to choose the wisest one for you.
Put forth the effort to grasp the distinctions between Chapter 7 and Chapter 13 bankruptcies. Do some research about these options so you can choose the best 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.
Talk to an attorney about reducing your car payments so that you can keep your vehicle. In many cases, you can reduce your payment by filing a Chapter 7 petition. Your car must have been purchased more than 910 days prior to filing, be a high interest loan, and you must have had a steady work history for this to work.
If you have filed for Chapter 13 bankruptcy, you will still be allowed to apply for and receive a mortgage or car loan. However, it won’t be as easy as it may have been to get one prior to the bankruptcy. You will have to see your trustee and the approval for this new loan. Document your budget to prove that you’re going to be able to make the payments. You should also be prepared to explain why you need to purchase the item.
While the idea of bankruptcy sounds terrible, sometimes you can’t avoid it. Now that you’ve come to the end of this piece, you have some ideas about how the process works. Learning from people who traveled down this road before can make your journey less stressful.