It’s hard to make the decision of filing for personal bankruptcy; however, sometimes there’s no choice. Going through this ordeal is easier when equipped with lots of solid advice. Continue on for some helpful information from people who have dealt with the bankruptcy process themselves.
Don’t use a credit card to pay off your taxes before filing for bankruptcy. In many parts of the country, you cannot get this debt discharged, and in the end you will be left owing the IRS a big sum of money. One thing that you should remember is that if your tax is dischargable, your debt will also be dischargeable. If you live in an area where tax can be discharged through bankruptcy, financing your tax bill is pretty pointless.
Think through your decision to file for bankruptcy carefully before going ahead with it. There are other options available, such as credit counseling for consumers. If you file for bankruptcy, a mark is permanently left on your credit. Therefore, before you do this, you should utilize all the other options that you have.
When it appears likely that you will file a petition, do not start spending your last remaining funds on debt repayment. You should never touch your retirement accounts, unless you have absolutely no choice. Though you may have to break into your savings, keep some available for difficult times. You will be glad you did.
Credit Card
Be warned that after your bankruptcy, you may stand out as a leper to credit institutions. You may be unable to get a simple credit card. If this happens to you, think about applying for a couple of 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. In time, it may be possible for you to obtain unsecured cards.
Don’t try to hide anything if you are filing for bankruptcy, as this will hurt you in the long run. Penalties may include fines, imprisonment or denial of the filing. Do not hold back anything, and form a sound plan to make peace with your reality.
Prior to declaring bankruptcy you really need to be sure that you’ve exhausted all your other options first. If your debt is relatively low, you may be able to manage it with credit counseling. Also, if you just contact your creditors and speak to them plainly and truthfully, the odds are good that you can negotiate a better payment structure that you can afford.
Be certain to grasp the distinction between Chapter 7 and Chapter 13 bankruptcy cases. If Chapter 7 is what you file, your debts will get eliminated entirely. All the things that tie you to creditors will go away. Filing Chapter 13 differs by requiring you to agree to a 60 month plan to repay your debts before they are totally eliminated. It is vital that you know the differences between these types of bankruptcies, in order to find the option that’s best for you.
Protect your home. Filing for bankruptcy will not always result in losing your home. Depending on whether the value of your home has decreased or if you have a second mortgage on the home, you may end up keeping it. Otherwise, look into the homestead exemption which may allow you to stay in your home if you meet financial threshold requirements.
No one ever wants to declare bankruptcy, but sometimes, it is just unavoidable. Here you have found some great advice and help to guide you in your bankruptcy. Know that you are not the first, and surely not the last. You will find that every journey in life goes more smoothly if you heed the advice of those who go before you, and this one is no different.