Stop Collection Calls By Filing For Bankruptcy
Facing bankruptcy makes life difficult. When you’re constrained financially, your options become limited, in general. Your credit score has been damaged and it can be difficult to get loan approvals. However, although difficult, it is not impossible to secure a loan.
Don’t think that loading up your credit card with tax debt and then filing for bankruptcy is an answer either. In most states, this debt won’t be discharged, and you could end up owing the IRS a whole lot more. If the tax can be discharged, so can the debt. So using your credit card to pay off your tax obligations, then filing for bankruptcy, can actually hurt you instead of help you.
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. You should not use your retirement savings unless the situation calls for it. While you may have to use a part of your savings, never completely wipe it out which would only leave you in worse financial shape in the future.
Do some research to find out which assets you could lose by filing for personal bankruptcy. The Bankruptcy Code lists assets considered exempt from being affected by bankruptcy. Make sure to review the list before filing a claim so you know if your valuables will be subject to seizure. It is important to know what types of possessions may be taken away before they actually are seized.
Be aware of recent changes, if any, in the bankruptcy code. If you want to file for bankruptcy successfully, it’s important to review the latest applicable laws. They tend to change frequently. A qualified bankruptcy attorney is the best source for the latest information regarding the laws in your state.
Prior to declaring bankruptcy you really need to be sure that you’ve exhausted all your other options first. For example, consumer credit counseling programs can help you by renegotiating your debts with your creditors into payments that you can afford. You may also find success in negotiating lower payment arrangements yourself, but be certain to get any arrangements with creditors in writing.
Chapter 13
There are two types of bankruptcy filing, Chapter 7 and Chapter 13 so make sure you know the differences. If you file for Chapter 7 bankruptcy, all of your debts will be eliminated. You will be removed from any contracts you have with your creditors. 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.
Before declaring bankruptcy, see if there’s anything less drastic you can do to repair your credit. You can get your interest rates reduced or enter into a debt repayment plan. Before you file bankruptcy, ask your attorney if any of these are viable alternatives for you. You can apply for a modification of your mortgage if your home is going into foreclosure. Lenders can assist you in a lot of ways, by cutting interest rate charges and cutting off late fee charges. They can also lengthen the loan. Most creditors will be willing to work out an option to avoid not getting paid at all.
In time you will leave the effects of bankruptcy behind you and resume your normal life. When you show good faith and you’re repaying your debts, this effort will be noticed in a positive light by the creditors. Eventually, you will be able to brush every bit of that dirt off of your shoulders and once again be able to live a normal, credit-driven life if you so choose.