Understanding What To Expect When You’re Going Through A Bankruptcy

by Dori Tery on February 24, 2016

You can become fearful of the IRS due to facing their repossession of valuables. Put an end to the collection calls and file for bankruptcy if this is your only option to get out of debt. Continue ahead for tips that will ease you through the bankruptcy process.

If you are in this position, you should read up on the bankruptcy laws in your state. Each state has its own laws regarding bankruptcy. For instance, in some states you can keep your home and car, but not in others. You should be familiar with the laws for your state before filing.

Credit Card

Don’t use a credit card to pay your taxes before filing for bankruptcy. In many areas of the country, this debt will not be dischargeable, and you may still owe money to the IRS. This means using a credit card is not necessary, since bankruptcy will discharge it.

The Bankruptcy Code has lists of various asset types that are exempt from forfeiture to pay off creditors. If you don’t heed that advice, you may be unpleasantly surprised sometime down the road if any of your most valued items are seized.

Chapter 7

Be certain to grasp the distinction between Chapter 7 and Chapter 13 differ. Chapter 7 involves the best option to erase your debts for good.All happenings with creditors will go away. Chapter 13 bankruptcy allows for a payment plan to eliminate all your debts.

Understand the differences between a Chapter 7 and a Chapter 13 bankruptcy.Take the time to find out about each one online, and then figure out which one will be best for your particular situation. If something doesn’t make sense to you, consult with your attorney about the details before you decide which type of bankruptcy you want to file.

Don’t file bankruptcy if you get is bigger than your debts. While filing may seem simple and a way to get out of paying your debts, it is a stain that will remain on your credit report for seven to ten years.

Look at all of your options before filing. Loan modification plans can help you are dealing with foreclosure. The lender can help your financial situation by getting interest rates lowered, so they may be willing to forgive some fees, change the loan term or reduce interest as ways of assisting you. When push comes to shove, the creditors want their money, and they are willing to make concessions to get it and prevent the debtor from declaring bankruptcy.

This stress could morph into clinical depression, so do what you can to fight that from happening. Life will get better once you get this situation over with.

For example, a filer cannot transfer assets to someone else for at least a year before filing.

Once your bankruptcy is over, contact the three major credit reporting agencies and request copies of your report. Check to make sure your report accurately reflects your recently discharged debts.

Any debts omitted from the paperwork will not be discharged.

Some lawyers offer a phone service creditors can call instead of you. This will put an end to annoying phone calls from calling you in the future.

Of course you could decide to file bankruptcy, but learn of your other choices first. Bear in mind the fact that a number of services for debt consolidation are actually fraudulent and will cause you more problems. Keep the advice from this piece in mind to help you make smart financial decisions.

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