Filing For Bankruptcy: What You Need To Know

Debt has become a problem for many people facing this tough economy. They are harassed by collection agencies and creditors and cannot get their finances under control. If you are experiencing overwhelming stress due to your financial situation, you might want to think about filing personal bankruptcy. To learn more about the process and what it means for you, check out the information provided below.

TIP! Ask yourself if filing for bankruptcy is the right thing to do. There are other options available, such as credit counseling for consumers.

One of the best ways to learn more about the bankruptcy process is to hit the Internet and look up reputable bankruptcy websites. The US D.O.J., the A.B.I and the N.A.C.B.A. are all useful organizations willing to provide educational material. The greater your body of knowledge, the better prepared you will be to make the decision of whether or not to file and to make certain that if you do file, the process is a smooth one.

Do not pay your taxes with credit cards that will be canceled when you file for bankruptcy. In many areas of the country, this debt will not be dischargeable, and you could be left owing a significant amount to the IRS. The main thing to remember is that dischargeable taxes are the equivalent of dischargeable debts. Because of this, transferring the debt to your credit card is pointless.

TIP! 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 you are truly faced with bankruptcy, avoid blowing your savings or retirement money, trying to pay off debts. Do not tap retirement accounts unless there is no other alternative. You may need to use some of your savings; however, you should not use all of your savings. Remember that you must safeguard your future financial security.

Ensure that you are providing genuine details when filing a bankruptcy petition, because honesty is the best policy when dealing with bankruptcy. Not only is hiding income and assets wrong, it is also a crime.

TIP! Do some research to find out which assets you could lose by filing for personal bankruptcy. You can find a listing of the asset types that are excluded from bankruptcy in the Bankruptcy Code.

You may still have trouble receiving any unsecured credit after a bankruptcy. Secured cards can be a great way to get started if this happens to you. Having a credit card of any type will allow creditors to realize that you’re attempting to work in the right direction to repair your credit. After using a secured card for a certain amount of time, you might be offered an unsecured card once again.

Do some research to find out which assets you could lose by filing for personal bankruptcy. There are several assets which are exempt from bankruptcy; therefore, consult the Bankruptcy code. It is important to be aware of this list so you will know what assets are saved. If you neglect this important step, you might be blindsided when a possession that is important to you is taken to repay creditors.

Chapter 7

Be certain that you can differentiate between Chapter 7 and Chapter 13 bankruptcy. If you file using Chapter 7 bankruptcy, you will get all your debts eliminated. Any debts that you owe to creditors will be wiped clean. 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.

TIP! Educate yourself about state bankruptcy laws and possible outcomes before filing your petition. The laws change a lot, so you need to look them up and have a better idea of how to properly approach the bankruptcy process.

Chapter 13 bankruptcy might be a good option, so don’t overlook it. Chapter 13 bankruptcy is a good choice for people whose unsecured debts amount to lower than $250,000 and who receive a regular income. You can secure your home under Chapter 13 and pay your debts with a payment plan. It usually takes three to five years to fulfill this plan. When the time is up, you’re unsecured debts will be discharged. Remember, though, that if you fail to make even one payment, the case will be thrown out and you’ll be right back where you started.

Get the word “shame” out of your head when filing for bankruptcy. Bankruptcy can sometimes leave people feeling guilty, ashamed and alone. 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. Focusing on the positive during this stressful time is a good strategy for coping with your ordeal.

TIP! Consider other alternatives before filing for bankruptcy. If your debt is relatively low, you may be able to manage it with credit counseling.

It is important to file bankruptcy before its too late. For some people, they tend to ignore their poor financial situation and just wishing it away, but that is only putting you in more danger. It doesn’t take long for debt to become unmanageable, and not taking care of it could eventually lead to wage garnishment or foreclosure. As soon as you find yourself experiencing financial problems, take action and discuss your options with a bankruptcy attorney.

Be sure you know the bankruptcy laws before you think about filing. Did you know that in some areas, you cannot transfer assets from yourself to another person in the year previous to filing occurring? It’s also prohibted to run up debt on credit cards just prior to filing.

TIP! Learn the differences between Chapter 7 and Chapter 13 bankruptcies. Chapter 7 bankruptcy is intended to wipe out all outstanding debts.

Make a comprehensive list of all of your financial information before you file for bankruptcy. Leaving out information either purposely or by mistake can prolong your petition, or have it dismissed completely. Add absolutely everything to your list, including small amounts. Don’t forget about side jobs, loans you’ve taken out or vehicles that might count as assets.

You have undoubtedly gleaned from the text above that bankruptcy doesn’t have to be a difficult process as long as you’re informed. By approaching bankruptcy proceedings with a clear frame of mind, you can use the process as a valuable tool to help you rid yourself of debt and get on with your life.