Personal Bankruptcy: Tips For Starting Over With A Clean Slate
Posted at by PConran on category BankruptcyGoing through bankruptcy is a stressful experience. When things are tough financially, your credit options are limited. Yet even if your credit score is not good there are things you can do to still get the things you want, such as a car or home loan, read on to find out how.
Do not use a credit card to pay income taxes and then file for bankruptcy. In most states, you will still owe money to the IRS and have to take care of the interest of your credit cards. One thing that you should remember is that if your tax is dischargable, your debt will also be dischargeable. So it does not help you to put the tax bill on your charge card if you know the debt will be discharged anyway.
Ask yourself if filing for bankruptcy is the right thing to do. Avail yourself of other options, including consumer credit counseling, if they are appropriate for your situation. 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.
When it gets time to think about bankruptcy, avoid using your retirement or savings to pay off the creditors or even make attempts to settle the debt. You should make every effort to leave your retirement accounts untouched until your retire. You may need to tap your savings, but don’t empty your savings account, as this could leave you in a difficult situation down the road.
Be brutally honest when you file for bankruptcy, as hiding assets or liabilities, will only come back to haunt you. The professional that helps you file for bankruptcy has to have a complete and accurate picture of your financial condition. Divulge all of your information so that you and your lawyer can devise the best strategy for dealing with your situation.
You need to educate yourself on the differences between Chapter 7 and Chapter 13. In Chapter 7 most of your outstanding accounts will essentially be erased. Any ties that you have with creditors will be dissolved. Chapter 13, on the other hand, involves a five year payment period before any remaining debts are cancelled. It’s crucial that you know the differences between all of the various kinds of bankruptcies so that you may choose the best option for your situation.
Remember to only file for bankruptcy if you need to. Consolidating current debt could make it easier to manage. Filling for bankruptcy is a lengthy, stressful process. Credit will be much harder for you to come by after you file for bankruptcy. Therefore, you must make sure that there is no other option that you could take before you file for bankruptcy.
Bankruptcy is a step that many people have to take, and as you can see, it’s not a permanent black mark. As long as you do what you need to do in order to get your credit back into shape, you can get back on top again. Manage your finances more efficiently and file for bankruptcy if you absolutely need to get out of your current situation. Once you can show that yo are responsible, lenders will view you more favorably.