How To File Bankruptcy The Right Way

Posted at by PConran on category Bankruptcy

There is no doubt that the current economy is a challenging one. Even with a depressed economy, jobs are lost despite debts needing to be paid. Rising personal debt leads, in many cases, to increased bankruptcy filings. If you or a loved one is considering bankruptcy, find out what to do about this situation by reading this article.

Don’t use a credit card to pay off your taxes before filing for bankruptcy. In many areas of the country, this debt will not be dischargeable, and you could be left owing a significant amount to the IRS. Rule of thumb is if the tax is dischargeable, then the debt will be dischargeable. So as you can see, in this situation there is no need to use the card when the debt will be discharged when you file for bankruptcy.

Avoid exhausting your savings or emptying your retirement accounts to pay off creditors if you are considering filing for bankruptcy. Unless there are no other options, your retirement funds should never be touched. Of course you will have to touch some of your savings to get through all of the hearings, but do not put out any money that you do not have to by law.

It can be difficult to obtain unsecured credit once you have filed for bankruptcy. Secured cards can be a great way to get started if this happens to you. This will show people that you are serious about getting your credit record back in order. If you pay your secured card off on time, you’ll eventually find that companies will start offering you unsecured credit.

If a personal recommendation comes your way, this should be a lawyer you focus on. You want your bankruptcy to go smoothly, and the Internet is rife with fly-by-night companies whose only goal is to prey upon the financially desperate.

Be honest when filing for bankruptcy, because hiding liabilities or assets can only cause trouble to you. All of your financial information, be it positive or negative, must be disclosed to those in charge of filing your case. They need to know it all. Do not hold back anything, and form a sound plan to make peace with your reality.

You need to educate yourself on the differences between Chapter 7 and Chapter 13. In Chapter 7 bankruptcy, your debts are all eliminated. Your responsibilities to your creditors will be satisfied. Chapter 13, on the other hand, involves a five year payment period before any remaining debts are cancelled. In order to choose the right bankruptcy option, you need to know the differences between these kinds of personal bankruptcy filings.

Always protect your house. Bankruptcy doesn’t always mean you’ll lose your home. You might be able to keep your home, contingent on certain factors, such as your home decreasing in value or having a second mortgage. Check to see if you pass the requirements necessary to file for a homestead exemption.

If your paycheck is larger than your debts, avoid filing for bankruptcy. The cost to your credit history far outweighs the simplicity of the easy-out bankruptcy. This is a hard pill to swallow for many.

Even as the economy begins to recover, many people are still in difficult financial straits. Just keep in mind that there are resources available to help you to avoid using bankruptcy, even if you do not have steady income. This article should have given you some solid advice for staying afloat in tough times. Put this advice to work for you starting today.

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