What Everyone Should Know Before Filing For Personal Bankruptcy
Posted at by PConran on category BankruptcyIf the IRS has begun repossessing your assets, bankruptcy could be of help. Filing for bankruptcy will ruin your credit score, but it might be the only way of getting out of debt. Pay attention to what this article is teaching you about bankruptcies and their pitfalls.
It is simple math; when you owe more than you are able to pay off, a bankruptcy is the likely solution. When you are faced with this issue, begin to familiarize yourself with your state’s laws. Each state has its own set of rules regarding bankruptcy. Your home and other major assets may be protected in your state, while they are vulnerable in other states. It is best to become familiar with your state’s laws regarding bankruptcy before you take the steps to file.
Before you decide to file bankruptcy proceedings, determine which assets will be safe. The kinds of assets which may be exempted during bankruptcy proceedings are listed in the Bankruptcy Code. You need to compare this list to the assets you own so that you are not surprised when certain assets are seized. 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.
Keep working to improve your situation. When you file for bankruptcy you may be allowed to recover property like your car, electronics or jewelry that might have been repossessed. You may be able to get your property back if fewer than 90 days have passed between the repossession and are filing for bankruptcy. Talk to a lawyer for help with the petition filing process.
See if there is an alternative you can use before declaring bankruptcy. For example, if your debt is small, try a type of consumer counseling program. You may have luck negotiating lower payments by dealing directly with creditors, but be sure to document any get and new agreement terms in writing from each creditor.
You may have heard bankruptcy referred to differently, either as Chapter 7 or Chapter 13. Learn the differences between the two before filing. The Chapter 7 variety can help you eliminate your debts almost entirely. All the things that tie you to creditors will go away. On the other hand, filing for bankruptcy under Chapter 13 means you will have 60 months to pay your debts back. You have to know what differs between all of the kind of bankruptcy, so you know which is one is ideal for you.
Bankruptcy should not be filed by anyone who makes more than their bills cost. Remember that the record of your personal bankruptcy filing will be discernible on the report of your credit for as many as 10 years. For this reason, bankruptcy filing should not be taken lightly.
Think about all the choices available to you when you file for bankruptcy. Find out if you can receive a reduced interest rate or altered repayment plan instead of bankruptcy filing. Loan modification plans can be helpful for those facing foreclosure. The lender can help your financial situation by getting interest rates lowered, dropping late charges, and in some cases will allow you to pay the loan over a longer period of time. Creditors want to recoup the most money possible from debtors, and they can often get more through debt repayment plans than bankruptcy procedures.
Before declaring bankruptcy, it is important to know your rights. Do not take debt collectors at their word when they tell you that a specific debt can’t be discharged through bankruptcy. Most loans can be discharged outside of certain things, like child support or loans you are paying back due to student lending. If your creditors are telling you any other kind of debts cannot be cancelled, get a written proof and send it to the general office of your state’s attorney to report this illegal behavior.
You should never feel shame for needing to file for bankruptcy. Going through the filing process often brings out the worst in people, causing them to feel a variety of negative emotions. Continuing to let yourself feel that way can damage your emotional health and does not benefit you in your endeavors to deal with your financial situation. Remembering to stay positive as you go through financial difficulties is a great way to deal with your bankruptcy filing.
We would like to reiterate that you always have the option of filing for personal bankruptcy. Given that fact, it should be your last resort due to the consequences involved. Arming yourself with knowledge is a good way to protect assets and approach the process wisely.