Filing for bankruptcy is a decision that shouldn’t be undertaken without a lot of deliberation. It is vital that you know everything that can happen when you file for bankruptcy. Make sure to use what you learned from this article to make the right decisions. No matter what tough decisions you have to deal with, you can do it!
You could see about filing for Chapter 13 personal bankruptcy. Chapter 13 bankruptcy is a good choice for people whose unsecured debts amount to lower than $250,000 and who receive a regular income. That way, you can hold onto your personal assets and pay back a portion of your debts pursuant to an approved plan. Generally, this stays in effect for up to 5 years. Afterwards, your unsecured debts clear from your accounts. Remember that missing a payment to the plan will result in your case being dismissed.
A lot of bankruptcy attorneys will let you have a consultation, so try several out. Ensure that your meeting is actually with the attorney, not with a paralegal or an assistant. People in these positions are unable to offer legal advice. Hiring a lawyer could help you become comfortable with the legal things that you will encounter.
Opening up fresh lines of credit is an important way to improve your credit health following a bankruptcy. This is hard if you have bad credit, but using a secured credit card is something that you could do. While the rates on these are elevated, you will typically pay larger rates no matter where the credit is coming from. Having a line of credit that you pay on regularly will show other creditors that you deserve their credit.
Do not assume that all your debts will be automatically dismissed as you file for bankruptcy using chapter 7 bankruptcy. You may need to reaffirm certain secured debts. As a result, you must sign another agreement that says you’ll repay them. In addition, under certain circumstances, some debts can’t be discharged. For example, child support payments, alimony and other court-related fines cannot be discharged by filing for Chapter 7.
Remember that just because you have filed for personal bankruptcy it will not cause you to lose everything you own. Most of the time, you retain your personal possessions. This covers items such as clothing, jewelry, electronics and household furnishings. It will be dependent on your own personal circumstances and the laws in your state, but you might also be able to keep your house and care.
Whenever you file a petition for bankruptcy, do not leave out any information about your finances or assets. If you forget any items, your filing could be rejected. Even if it’s a small sum, make sure it is listed. This financial information may include income from side jobs, vehicles you own and loans you have not paid off.
Chapter 13 Bankruptcy
When you file for personal bankruptcy, it does not necessarily mean that all of your debts will be discharged. For instance, Chapter 13 allows you to plan a payment plan and to pay back your debt over the next five years. Chapter 13 bankruptcy allows those who have more steady income to manage their debt without the perceived irresponsibility of filing for Chapter 7 bankruptcy. If you file for chapter 13 bankruptcy you will be given the opportunity to pay off as many of the debts you have as you can.
If you are faced with the choice of filing for bankruptcy or using your emergency fund or retirement accounts to pay creditors, opt to file for bankruptcy. Retirement accounts should never be touched if it can be helped. Dipping into savings may need to happen, just don’t totally wipe it out, or you might not have much financial security later.
It is not uncommon for those who have endured a bankruptcy to promise to never utilize credit again. That is not a great idea, because using credit builds better credit. Credit cards are necessary for proving that you have gained financial stability and for garnering mortgage and auto loan approvals. Keep it simple with one card and take a slow approach to rebuilding.
Filing for bankruptcy is hard on anyone, and can cause extreme amounts of stress. The best way to lessen this stress is to employ a lawyer, who can handle most of it for you. Don’t think that the highest priced attorney is the best. Hire the best attorney you can afford, not the one who charges the most. Ask for referrals from folks who have filed and check reputations with the BBB. You can attend court hearings if you want to see a prospective attorney in action.
Before you make the decision to file for bankruptcy, be sure to study all of the applicable rules and regulations. Analyze your debt situation, and find out which of your types of debt could be discharged under bankruptcy. Some debts like non-essential items you charged on your credit card within the past 90 days before declaring bankruptcy cannot be discharged. Be certain to know the laws that apply in your jurisdiction.
File for bankruptcy before your finances get completely out of control. 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. Debt can snowball very fast, and by ignoring it, you increase the chances of worse problems, such as foreclosure and wage garnishments. As soon as you stop denying that your debt is unmanageable, seek the advice of a good bankruptcy attorney.
Before you file make sure that you are not doing anything to bring yourself in debt any more. Do not take on more debt or use more of your current credit. Determinations on whether to grant a bankruptcy are made after looking at your entire record; current history in addition to past issues. Let them see how you are making positive changes to your personal financial management by demonstrating what you are doing right now.
This article outlined a few different types of personal bankruptcy. Do not let this information overwhelm you! Take time to think about what you have read here. When you think things through, you make good decisions in life.
Do you want to pay off your debt and be financially free for the first time in a long time? Regardless what income level you’re comfortable with, the most critical factor to make it a reality is to change your mindset. Orrin Woodward, renowned personal development expert is one of the top authority in establishing proper culture and balance to build stronger, sustainable, and repeatable profitable enterprise from home. Orrin Woodward is also a co-founder of the LIFE business.