Things You Need To Know Before You File Personal Bankruptcy
Posted at by PConran on category BankruptcyThe path to bankruptcy is not normally a happy one, but your life can improve once the filing has occurred. The main purpose of filing is to start a new and improved financial situation. By following the tips presented here, you can transform your life through personal bankruptcy.
Don’t use a credit card to pay off your taxes before filing 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. In most cases, you can use the adage that “a dischargeable tax is a dischargeable debt.” So, there’s no reason to make use of a credit cards if it will not be discharged in bankruptcy.
When you feel certain that you must file for personal bankruptcy, refrain from squandering your life savings to pay off unsecured debt. You should not use your retirement savings unless the situation calls for it. While dipping into your savings is likely to be necessary, avoid wiping it out completely to prevent leaving yourself with little financial security in the future.
Be aware that getting unsecured credit is going to be tough once you’ve gone through bankruptcy. If this happens, instead you should turn your attention to secured credit cards. Using a secured card not only helps to rebuild your credit, but it also keeps you from going more in debt with credit card bills. Once creditors see that you are making an effort to restore your credit, they may allow you to get an unsecured card in the future.
Determine which of assets are safe from seizure and which are not before filing for personal bankruptcy. The Bankruptcy Code contains a list of various assets that are excluded from bankruptcy. It is vital that you completely understand which assets are protected and which assets can be seized prior to filing bankruptcy. It is important to know what types of possessions may be taken away before they actually are seized.
Weigh all of your options before declaring bankruptcy. For example, you want to look into credit counseling. This is the best option for small debts. You should also try negotiating a payment plan with your creditors; make sure you get a written agreement of the new payment plans.
Do what you can to keep your home. Filing bankruptcy does not necessarily mean that you will lose your house. It may be possible to keep your home if the value has depreciated, or there is a second mortgage. Additionally, some states have homestead exemptions that might let you keep your home, provided you meet certain requirements.
Before filing bankruptcy consider every available avenue. It may be that all you really need to do is consolidate some of your debts. Going through a bankruptcy is a long and stressful process. It will affect your access to credit in the future. This is why you must ensure that bankruptcy is the only option left for you.
Again, it is likely that whatever precipitated a bankruptcy filing was not something on which you look back fondly. However, the story that gets written after bankruptcy does not have to be depressing too. In fact, if you apply the ideas and advice given in this article, you can truly make bankruptcy a turning point in your life towards better days.