Bankruptcy: What To Consider When Filing

Bankruptcy: What To Consider When Filing

Is is often hard to live with bankruptcy. When things are tough financially, your credit options are limited. Filing for bankruptcy doesn't mean you are permanently barred for owning things that require large loans, such as an automobile or a house. Read these tips to find out more.

Filing for bankruptcy is something many people are forced to do when there debts become too much of a burden, and they can no longer afford to pay them. If this describes your situation, it makes sense to become familiar with relevant laws. When it comes to bankruptcy, states have varying laws. For instance, your home might be protected in some states while you might lose it in others. Before filing for personal bankruptcy, be certain that you are familiar with the laws.

Don't pay tax requirements with your credit cards with the thought of starting the bankruptcy process afterward, without doing your research first. Most places will not consider the debt dischargeable, meaning you will have to pay the IRS a lot of money. If the tax can be discharged, so can the debt. Therefore, you have no reason for use of a credit card, if the amount is to be discharged in due process of the bankruptcy.

Before you file for bankruptcy, find out which of your assets will be exempt from seizure. The Bankruptcy Code provides a list of all the different kinds of assets that you can exclude. Prior to filing for bankruptcy, it is critical that you go over this list, so that you know if you can expect any of your most valuable possessions to be seized. If you fail to do so, things could get ugly.

Protect your house. You don't have to lose your home just because you are filing for bankruptcy. 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. There are also homestead exemptions which, depending on your other finances, may allow to remain in your home.

Think about all the choices available to you when you file for bankruptcy. Talk to a bankruptcy lawyer to see if a debt repayment plan or reduction in interest rates is a viable option for you instead of bankruptcy. If foreclosure is imminent, see if your loan can be altered at all through a modification plan. The lender may be willing to reduce interest rates, eliminate late charges or extend the life of the loan. At the end of the day, creditors want to get paid, and sometimes a debt repayment plan is preferable to dealing with a bankrupt debtor.

If you are worried about your car being repossessed, consult your attorney about trying to get the monthly payment lowered. Filing for Chapter 7 can help to lower your monthly payments on possessions such as your vehicle, helping to ease your financial load. There are a few requirements that you have to meet to be eligible, though. You have to have bought the car more than 2.5 years ago, your loan's interest rate needs to be over a certain amount, and your employment history has to be good.

Your trustee may be able to help you secure an auto loan or get a mortgage even though you have filed Chapter 13. This is harder. You will need to go through various hoops in order to be approved for any new loan type. You will need to come up with a budget and show that this new loan payment schedule is doable. Also, be sure you can provide an explanation as to why this purchase is necessary.

Make sure that you act at the appropriate time. Timing can be critical when it comes to personal bankruptcy cases. In some cases, it is better to file immediately, while other situations benefit from trying to get certain finances in better shape before filing. Speak to a bankruptcy lawyer to determine what the ideal timing is for your personal situation.

Bankruptcy is a challenging time and can create a huge amount of mental and emotional stress. By hiring a competent attorney, you can alleviate some of that stress. Don't hire based solely on cost. The cheapest attorney may not be the best, but the most expensive may not be the best either. Rely on word-of-mouth referrals from others who have filed for bankruptcy, check the BBB, and take advantage of free consultation offers. Consider attending a court hearing so you can witness how the lawyer operates.

Consider every option prior to filing for bankruptcy. Consider credit counseling. There are some good non-profit organizations that could help you. With their assistance, you can reduce the payments you have to make and even get some of the interest removed from your debts. You pay them and then they pay the creditors.

Don't take out big cash advances from any of your credit cards prior to filing for bankruptcy, taking advantage of the fact that those debts will later be erased. This is fraud, and you will be required to pay that money back.

Be careful on how you pay your debts before you file a personal bankruptcy. The laws surrounding bankruptcy often prohibit paying back certain creditors up to ninety days prior to filing, and family members up to a year! Make sure you have a complete understanding of what is occurring prior to making any final decisions.

Choosing a good lawyer is an important step in the process. There are a large number of less than credible bankruptcy lawyers out there. Sort through your different options to find an experienced lawyer who has all the necessary credentials. By searching online, you can find background information about lawyers along with client ratings and any disciplinary record an attorney may have.

Filing for personal bankruptcy does not mean you are limited in you daily life. If you don't spend frivolously and repay lenders faithfully, lenders will be more willing to lend to you in the future. Make the efforts to save and look at the impact it has when you attempt to make a home or car purchase.

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