Need A Fresh Start? Read These Tips Now!
Posted at by PConran on category BankruptcyPersonal bankruptcy can always be an option for people that have had items, like vehicles, repossessed by the IRS. Although filing bankruptcy can have a major effect on a person’s credit record, it may be the only viable option. Pay attention to what this article is teaching you about bankruptcies and their pitfalls.
Do not pay your taxes with credit cards that will be canceled when you file for bankruptcy. Credit card debt is handled charge by charge during bankruptcy, and in most states, tax debt cannot be discharged through bankruptcy. In most cases, you can use the adage that “a dischargeable tax is a dischargeable debt.” Therefore, you should not pull your credit card out for purchases if it is just going to be discharged during the bankruptcy.
Consider all options before deciding to file for personal bankruptcy. There are other options available, such as credit counseling for consumers. 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 it appears likely that you will file a petition, do not start spending your last remaining funds on debt repayment. Avoid ever touching retirement funds until you have no other choice. Although it is quite normal to use some of your savings, ensure that you leave enough in your account for emergencies.
Don’t be reluctant to remind your lawyer about specific details he may not remember. Do not assume that if you’ve already told him or her something important once, that they will remember it later without a reminder. Do not hesitate to speak up; this is your hearing and your future is on the line.
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. Whomever you plan to use should know a lot about the finances that you have, both the good and the bad. Put everything out on the table and craft a wise plan for handling the situation the best you can.
Weigh all of your options before declaring bankruptcy. Those with smaller debts may find use in a program for consumer credit counseling. Also, you could try to get your payments lowered on your own. If you decide to do this, get a copy of anything you agree to.
You need to educate yourself on the differences between Chapter 7 and Chapter 13. Chapter 7 bankruptcy completely wipes out your debt. Your former ties with creditors will cease to exist. In a Chapter 13, though, you’ll be put on a payment plan for up to 60 months before being free of your debts. It is vital that you know the differences between these types of bankruptcies, in order to find the option that’s best for you.
Protect your house. You don’t have to lose your home just because you are filing for bankruptcy. You could keep your home; it depends on your home’s value or if a second mortgage is on your home. Otherwise, look into the homestead exemption which may allow you to stay in your home if you meet financial threshold requirements.
Do not forget to be around those you love. Filing for bankruptcy is a difficult process. It can take a long time, take a great emotional toll and cause people to feel embarrassed and defeated. Many people decide to hide away from the world until the process is over. You shouldn’t do this, though, as staying away from the world can amplify any emotional issue you are having, and they could even morph into full-blown clinical depression. So, it is critical that you spend what quality hours you can with loved ones, regardless of your financial circumstances.
As mention earlier, you always have the option to file for bankruptcy. However, it must not be your first choice due to it causing complications on your credit. Knowledge is power when it comes to bankruptcy.