If the IRS or your other creditors are on to you about the money you owe, you should consider filing for bankruptcy. Bankruptcy can have a major effect on credit; but, at times, is the only choice. The advice below will provide you with all the information you need to understand the results of choosing to file for bankruptcy.
Do not consider paying off tax debt with credit cards and filing for bankruptcy afterward. It won't work. The fact is that the credit card debt will be ineligible for discharge, and your tax debt may increase. In most cases, you can use the adage that "a dischargeable tax is a dischargeable debt." If you live in an area where tax can be discharged through bankruptcy, financing your tax bill is pretty pointless.
Don't hide assets or liabilities when filing for bankruptcy. The professional that helps you file for bankruptcy has to have a complete and accurate picture of your financial condition. Never hide anything, and make sure you come up with a well devised plan for dealing with bankruptcy.
Keep at it! Filing a bankruptcy petition might facilitate the return of your property, including cards, electronics or other items that may have been repossessed. If you have property repossessed less than ninety days prior to filing your bankruptcy, you may be able to get it back. Consult with a lawyer who is able to assist you in the filing of your petition.
Educate yourself about state bankruptcy laws and possible outcomes before filing your petition. It can be tough to keep up with them on your own, and because they change often, a bankruptcy attorney can help you keep track for the sake of your filing process. To learn about any changes, search the Internet or contact your state's legislative office.
While going through this process, spend more time with friends and family. Filing for bankruptcy is a difficult process. This long and stressful process can leave a person feeling guilt ridden, unworthy and ashamed. Many people decide to hide away from the world until the process is over. However, this isolation will just make you feel worse, and it could cause you to be depressed. Thus, you must keep living your life and socializing with those you love, no matter what is going on with your bankruptcy.
Don't file for bankruptcy the income that you get is bigger than your bills. Although bankruptcy may feel like a simple method of getting out of your large debt, it leaves a permanent mark on your credit history for up to 10 years.
Look into all of your options before you choose to file for bankruptcy. There are many other options including debt consolidation and making payment plans with your creditors. If you are facing foreclosure, consider a loan modification plan. 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. When all is said and done the creditors just want their money, and more often than not will work with you on a repayment plan.
After you have finished with the initial process of filing, you can relax and take a breather. It can be several months between the initial filing and the final discharge of debts. It is essential to cope with this stress well, to prevent becoming depressed. Things will be sunnier after you take positive steps to move forward.
If you filed for Chapter 13 bankruptcy, you can still get a mortgage or a car loan. It is much harder. Your bankruptcy custodian will need to approve the loan. You need to show them why and how you can handle paying back the new loan. Be ready to justify the purchase that you need the loan for, too.
It is important to understand your rights when you file for bankruptcy. You might hear from your creditors that your debts cannot be canceled through bankruptcy. Most states allow for the majority of debt to be included on a bankruptcy. If a collector uses this tactic about debt that can, in fact, be discharged through bankruptcy, report the collection agency to the attorney general's office in your state.
Know the bankruptcy code backwards and forwards before filing. For instance, you are not allowed to move assets from your name to someone else's for a year before you file. In addition, it is unlawful for the filer to increase the amount of debt they are carrying on their credit cards right before they file.
It is possible that a bankruptcy might actually be smarter over the long term than struggling month to month with consistently late or missing payments. It is true that a bankruptcy stays on your credit record for ten years, but you are freed to start improving your credit immediately. Among the advantages of bankruptcy is that of a clean slate.
Choose your bankruptcy attorney carefully. There are a large number of less than credible bankruptcy lawyers out there. Often times, people choose lawyers that aren't licensed properly or that don't have enough experience. Don't fall victim to this. By searching online, you can find background information about lawyers along with client ratings and any disciplinary record an attorney may have.
Some lawyers offer free phone services that you can refer your creditors to in regard to any delinquent accounts. By contacting the phone number that you supply, your creditors can get confirmation that a bankruptcy filing incorporating their debt is underway. This will put an end to annoying phone calls from collectors.
If, after you file a Chapter 7 petition, you learn that the homestead exemption does not apply, it might be possible to convert your case to a Chapter 13. There may be situations in which it makes more sense to convert a Chapter 7 case to a Chapter 13, but it is important to discuss such a strategy with your lawyer.
As this article has shown, there are many aspects to bankruptcy to consider. Filing for bankruptcy should not be your first choice. Knowledge is power when it comes to bankruptcy.