Personal bankruptcy is always an option for those who have had possessions, such as vehicles, repossessed by the Internal Revenue Service. Bankruptcy can wreak havoc on credit, but it may be the only way out of your situation. Continue reading for more information about how and why to file for bankruptcy.
Once you have filed for bankruptcy, you need to go over your finances and do your best to come up with a manageable budget. You want to do this so that you will not end up so deep in debt again that you will have to file for bankruptcy, again.
Don’t think of bankruptcy as the ruination of your financial future. Once your bankruptcy has been discharged, you can begin to work on re-building your credit right away. By continuing to make timely monthly payments and not applying for new credit, you can significantly raise your credit score within 6 months. And, if you maintain good credit for that amount of time, you may find it possible to get approval for loans to make large purchases, such as a home or car.
Make sure you have a solid understanding of which debts can be eliminated by bankruptcy, and which ones cannot. Debts like student loans, child support or alimony payments, and taxes, are generally not discharged through bankruptcy. Bankruptcy can help if your wages are being garnished or if you have large unsecured debts, like, credit cards and utility bills.
After your bankruptcy has been discharged, or finalized, a good way to begin re-building your credit is to obtain a pre-paid credit card. This type of card is usually available at your local bank. The card is secured by the amount of money you load onto it. You can not charge more than what you have loaded onto the card, so over-spending shouldn’t be a problem. It works like a regular credit card, with monthly statements and payments. After you have kept this card in good standing for a period of time, you may be able to have it switched into a regular, revolving credit card.
Do not feel embarrassed or guilty about filling for bankruptcy. Many people fear that they will be treated as second class citizens after they declare themselves bankrupt. However, this is not the case. The option to ‘declare yourself bankrupt’ was developed by the government to enable assistance to be given to people who find themselves overwhelmed with debt and in need of a fresh start. Last year, over 1.4 million people filed bankruptcy and the majority of them are now living a happy, debt-free life. So, there is no need for you to be afraid of bankruptcy stigma.
Make a detailed list. Every creditor and debt should be listed on your application. Even if your credit cards do not carry a balance at all, it should still be included. Loans for cars or recreational vehicles should also be included on your application. Full disclosure is imperative during this part of the bankruptcy process.
Finding out about your personal bankruptcy options is the difference between a successful and an unsuccessful claim. The consequences for your credit make it a last resort in most cases. Learning how to manage this situation can minimize your headaches and prevent repossession of valuable property.