Advice On People Considering Filing Personal Bankruptcy
Posted at by PConran on category BankruptcySadly, bankruptcy is an increasingly widespread phenomenon of late. You can thank the dismal economy for that. Before you choose to file for bankruptcy, it is important that you know the ins and outs of the subject, in order to ensure you make the best decisions. The following tips are going to help clarify some bankruptcy confusion for you.
Do not consider paying off tax debt with credit cards and filing for bankruptcy afterward. It won’t work. Generally speaking, taxes are not a dischargeable debt. The delays caused by this sort of tactic could leave you owing the IRS a great deal in interest and penalties. Remember that if you can discharge the tax you can discharge the debt. Therefore, you should not pull your credit card out for purchases if it is just going to be discharged during the bankruptcy.
Be sure you’re doing what’s right before you file for bankruptcy. There are other options available, such as credit counseling for consumers. Bankruptcy is a serious negative on your credit history so make sure you have no other options before you file. It is important to keep your credit history as positive as possible.
Always be honest with the information you give about your finances. Resisting the temptation to hide income or valuable assets from the bankruptcy trustee is a smart way to avoid potential complications, penalties, and the possibility of being barred from re-filing in the future.
Make certain that you comprehend the differences between Chapters 7 and 13. If Chapter 7 is what you file, your debts will get eliminated entirely. Your former ties with creditors will cease to exist. Bankruptcy under the rules of Chapter 13, on the other hand, require you to work out a payment arrangement to pay back the agreed upon amounts. You have to know what differs between all of the kind of bankruptcy, so you know which is one is ideal for you.
You can take out a mortgage or car loan while filing Chapter 13 bankruptcy. It is just tougher. You will be required to meet a trustee and be approved for a new loan. It is important to make a budget and prove that you are able to afford the payment. The odds are also good that you will be asked exactly why you’re purchasing a new item. Make sure you have a good reason.
Know your bankruptcy rights. Do not take debt collectors at their word when they tell you that a specific debt can’t be discharged through bankruptcy. There are only three main classes of debts that are non-dischargable: taxes, child support and student loans. If these are not the categories in which your debts fall, double check to see if the type of debt can be bankrupted. If it can, be sure to file a complaint about the debt collector with the office of the state attorney general.
Exhaust all other option prior to filing personal bankruptcy. One option to consider is credit counseling. This does not necessarily have to cost you, as there are some organizations that will assist you for free. They can work with those you owe money to in order to give you lower payments and lowered interest rates, too. They pay your debts and you repay them.
Do not pay off debts blindly before you file a personal bankruptcy. You may find that bankruptcy law prohibits you from paying back some types of creditors for 90 days before you file, and a year for family members. Read up on the rules before you make any decisions about your finances.
Don’t drag your feet figuring out if bankruptcy is the right thing to do. It is difficult to admit that you are in over your head financially, but waiting will just make the problem worse. By talking to a professional, as soon as possible, they can give you some advice on things you can do before it all gets too complicated.
Many people file for bankruptcy every year, mainly because the economy is bad for everyone. Apply the tips from this article to make the best bankruptcy choices.