Navigate Financial Difficulties With These Personal Bankruptcy Tips

by Dori Tery on May 8, 2016

Filing for bankruptcy can be a viable for anyone who has had possessions repossessed by the IRS.Bankruptcy is a major life decision, but is often unavoidable. Read this article to learn more when it comes to filing bankruptcy as well as the consequences from doing so.

If you find yourself going through this, be sure that you know what the laws of your state are. Each state has their own laws regarding personal bankruptcy. For example, some states protect you from losing your home in a bankruptcy, but others do not. You should be familiar with the laws before filing for bankruptcy.

You have other options available like consumer credit that consumers can use. Bankruptcy will leave a permanent scar on your credit report and before you take this huge step, you should search through every available option first, it is in your best interest to make use of them.

Instead of getting your lawyer from the yellow pages or on the Internet, ask around and get personal recommendations. There are way too many people ready to take advantage of financially-strapped individuals, and it’s important to be sure your bankruptcy can go smoothly; take your time and choose someone you can trust.

The person you file for bankruptcy has to have a complete and bad aspects of your finances.

Don’t pay for the consultation and ask a lot of questions. Most lawyers provide a consultation for free, so consult with a few before settling on one. Only choose a decision after you feel like your questions were answered. You do not have to give them your decision before making a commitment. This will give you time to interview several attorneys.

Before declaring bankruptcy, make sure that a less-drastic solution isn’t more appropriate. If you owe small amounts of money, you may be able to manage it with credit counseling. You may have the ability to negotiate much lower payments, but be sure to get any debt agreements in writing.

Chapter 7

Be certain to grasp the distinction between Chapter 7 and Chapter 13 bankruptcy. Chapter 7 eliminates all of your debt. Any ties you have concerning creditors will be dissolved. Chapter 13 bankruptcy allows for a five year repayment plan that takes 60 months to work with until the debts go away.

Filing bankruptcy does not always mean you will lose your home. Depending on if your home’s value has gone down or if it has a second mortgage, you may end up keeping it. You are still going to want to check out the homestead exemption because it may allow you to keep your home.

Consider all available options before filing for bankruptcy. Credit counseling may work for you to pursue. There are many non-profit organizations that could help you. They will work with your creditors to get your payments lowered and interest reduced. You make payments to them and they pay your creditors through them.

This will be viewed as fraud, and you will be required to pay that money back.

It is not uncommon for those who have endured a bankruptcy to promise to never again use credit again. This is actually a great idea because credit to to help build good credit. If you do not use credit, you will not be able to buy a car or a home on credit again.

Make a prompt decision to be more responsibility for your financial situation before filing. It is important not to make your debt before filing. Creditors and even judges look at your current and past financial history when they are going through your bankruptcy paperwork. Your most recent behavior should show that you are making a real effort to modify your financial habits.

As mentioned earlier, filing a personal bankruptcy is an ever-present alternative. However, it has detrimental effects on your credit, so this should not be your first choice Reading up on the right ways to handle your situation will save you a lot of headaches in the long run.

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