Anytime you are faced with the prospects of filing for bankruptcy, it is not a good situation, but there is some light at the end of the tunnel when you get through this process. You are being given the opportunity to start again with a debt-free slate. Read this article to find out how to use bankruptcy for a chance at financial rebirth.
It’s important that you understand what bankruptcy is and how it will change your life before you attempt to file a claim. The United States Justice Department, the ABI (American Bankruptcy Institute), as well as the NABCA (National Assoc. Consumer Bankruptcy Attorneys) are excellent sources of information. 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.
Don’t pay tax requirements with your credit cards with the thought of starting the bankruptcy process afterward, without doing your research first. Most of the time, you won’t be able to discharge this debt, and you could make things worse with the IRS. The main thing to remember is that dischargeable taxes are the equivalent of dischargeable debts. Therefore, you have no reason for use of a credit card, if the amount is to be discharged in due process of the bankruptcy.
Most people end up filing for personal bankruptcy because they owe more than they make. If this is your case, you should do some research about bankruptcy laws in your state. Each state has its own laws regarding personal bankruptcy. Some states may protect you home, and some may not. You should be familiar with the laws for your state before filing for bankruptcy.
If filing bankruptcy is in your future, don’t waste any savings you may have attempting to pay off your debts. Retirement accounts should never be touched if it can be helped. Your savings accounts offer valuable financial security so try to leave them intact.
Never shirk on the truth in your petition for bankruptcy. You might feel tempted to not declare certain assets in your bankruptcy in order to protect them from forfeiture, but if you’re found out, the process could take longer, or worse, you might be banned from filing for bankruptcy completely.
Hire a lawyer if you plan on filing for bankruptcy. Having a lawyer on your side is the best way to avoid mistakes and bad decisions. A specialized bankruptcy lawyer can ensure that you are handling your bankruptcy filing the right way.
Be honest when filing for bankruptcy, because hiding liabilities or assets can only cause trouble to you. Good or bad, you must tell your bankruptcy attorney everything about your financial situation. Telling the truth will allow you reach a solution that is feasible, given your current situation.
Before you decide to file bankruptcy, be sure to check for any new laws that may apply to your case. 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. If you are not sure about the current laws all you have to do is look into what laws have been passed.
Before pulling the trigger on bankruptcy, be sure that other solutions aren’t more appropriate for your case. If your debt is relatively low, you may be able to manage it with credit counseling. You can also talk to creditors and ask them to lower payments, but be sure to get any debt agreements in writing.
If you are making more money than you owe, bankruptcy should not even be an option. 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.
You need to educate yourself on the differences between Chapter 7 and Chapter 13. Chapter 7 bankruptcy completely wipes out your debt. Your former ties with creditors will cease to exist. With a Chapter 13 bankruptcy, you will have to make payments for 5 years before the debts are forgiven. Both options have advantages and drawbacks, so do your research before deciding.
As stated earlier, anything that leads someone to bankruptcy is not a good story. However, the story that gets written after bankruptcy does not have to be depressing too. Bankruptcy is not the end. Follow the tips given here in order to make it a new beginning.
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