Essential Tips To Guide You Through Personal Bankruptcy
Posted at by PConran on category BankruptcyFiling for bankruptcy is not a pleasant experience. Bankruptcy is often a dire sign in a person’s financial life, and can cause significant embarrassment and shame. Read this article to learn more about bankruptcy and make the best decision.
If you are thinking about paying off your tax obligations with a credit card and then filing bankruptcy, think again. In most states, this debt won’t be discharged, and you could end up owing the IRS a whole lot more. Generally speaking, debt incurred to pay taxes and the tax bills themselves are treated the same in a bankruptcy. It is pointless to use credit cards if they can be discharged.
Consider all options before deciding to file for personal bankruptcy. Consider any other options that are available to you, such as 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.
When it soaks in that filing for personal bankruptcy, don’t use all of your retirement funds, or all of your savings to resolve insolvency or pay creditors. You should never touch your retirement accounts, unless you have absolutely no choice. If you have to use a portion of your savings, make sure that you save some to ensure that you are financially secure in the future.
Prior to filing for bankruptcy, discover which assets cannot be seized. Check the bankruptcy laws in your state to find out if certain items are excluded from your bankruptcy filing. It is vital that you know the things on this list prior to filing for bankruptcy, in order to determine which of your possessions will be taken away. While it might not be possible to protect a particularly beloved possession, at least you will know in advance whether or not you risk losing it.
It is important to list all your assets and liabilities during the bankruptcy proceeding. Failure to do so will only cause you problems in the end. It is necessary to be open regarding both the positive and negative aspects of your financial life. Lay everything out on the table so that you and your lawyer can devise a plan to get you out of this mess.
Make sure that you understand the difference between Chapter 13 bankruptcy and Chapter 7 bankruptcy. In Chapter 7 most of your outstanding accounts will essentially be erased. Any ties you have concerning creditors will definitely be dissolved. But, with Chapter 13, you will be in repayment plan for about 5 years prior to any debts you have being totally dissolved. In order to choose the right bankruptcy option, you need to know the differences between these kinds of personal bankruptcy filings.
Be sure you know what the difference between Chapter 13 and Chapter 7 bankruptcy is. Take time to research this online and see the pros and cons for filing each one. If something doesn’t make sense to you, go over it with your lawyer prior to choosing which one to file.
Be sure you have no other choice but to seek bankruptcy. Some people have great luck with handling debt with debt consolidation, which means taking out only one loan to pay off many loans. Bankruptcy is not a simple, breezy course of action that should be taken lightly. Credit will be much harder for you to come by after you file for bankruptcy. This is why you must make sure bankruptcy is your last resort.
You do not always need to give in and file bankruptcy. By following the tips presented here, you can avoid filing for personal bankruptcy. Put this advice to work in your life so that you can avoid damaging your credit rating.