Reasons Why Personal Bankruptcy Might Be Your Best Option
Posted at by PConran on category BankruptcyIt can be hard to file bankruptcy. If you are thousands of dollars in debt, you may not have many options. However, even if you have a poor credit score, you can still live your life and get some of the things you are looking for, like a car or a home.
Before undertaking the bankruptcy process, ensure you have made the correct decision. Look into other options, such as consumer credit counseling. Bankruptcy stays on your credit for a whole decade, so if there are less drastic options that will solve your credit problems, it is in your best interest to make use of them.
Ensure that you are providing genuine details when filing a bankruptcy petition, because honesty is the best policy when dealing with bankruptcy. To avoid problems, penalties and future re-filing bans, resist the urge to hide documentation or assets.
When it comes to informing your attorney about your case, don’t be fearful. Don’t just assume they already know and that they have these important details committed to memory or written down. Don’t fear speaking up since it affects your case and future.
If you know people who have filed for bankruptcy, ask them who they would recommend rather than relying on Internet reviews or worse, just randomly picking someone out of the phone book. There are so many dime-a-dozen companies out there who make it a practice of preying on financial desperation. You need to make sure your bankruptcy goes smoothly, so find someone you know you can trust.
Always protect your house. Filing bankruptcy does not necessarily mean that you will lose your house. If your home has significantly depreciated in value or you’ve taken a second mortgage, it may be possible to retain possession of your home. If you meet certain criteria, you may be able to retain ownership of your home even after filing for bankruptcy.
Understand the differences between a Chapter 7 bankruptcy and a Chapter 13 bankruptcy. There is a wealth of information online about each type of bankruptcy and their respective pluses and minuses. Learning about bankruptcy is not simple, so call a bankruptcy attorney to make an appointment to ask questions.
If you can afford to pay your bills, bankruptcy is not a wise option. Filing for bankruptcy can really damage your credit in the long run, by staying on your report for up to ten years.
Look at all the alternatives to bankruptcy before filing. For example, you can always talk with a lawyer to see about different options through creditors or other means that will not require wiping the entire slate clean. Loan modification plans on home loans are a great example of this. These plans allow you a longer pay off period by extending the term of the loan, reducing the rate of interest or forgiving late fees. Most creditors will be willing to work out an option to avoid not getting paid at all.
Before you decide to file for Chapter 7 bankruptcy, consider how it could affect other people on your credit accounts, such as family members or business partners. Speak to an attorney or read the bankruptcy laws in your state to find out if certain loans can be excluded from your filing. Any co-debtor may well be held responsible for paying off the total remaining amount of the debt, though.
During a Chapter 13 bankruptcy, you may still be able to get a mortgage or car loan. It is just tougher. You will have to get this loan approved by your trustee. When you meet with your trustee or financial adviser, make sure that you come up with a sound budget proposal. Be ready to justify the purchase that you need the loan for, too.
If you are in the situation to need to file for bankruptcy, this article has shown you that it is not the end of your life. If you are willing to work hard to save money and do not spend frivolously, you can regain your credibility with creditors. You will see just how big of a difference saving a little money can make when you go apply for your next home or car loan.