Once the province of the truly unfortunate, personal bankruptcy has become far more common in light of the financial meltdown of recent years. In order to understand the potential benefits and pitfalls of the bankruptcy process, knowledge is critical. Take the tips in this article to heart, and you will be on your way to building a sound financial future.
You should look into and understand which debts are eligible to be written-off under bankruptcy. There are certain loans, such as student loans, that do not qualify. By understanding which debts you can write-off, you can make a better decision when trying to figure out if bankruptcy is the right choice for you.
It is essential that you are honest and forthright in the documentation you provide for your bankruptcy filings. Do not try to shield some assets or income from your creditors. This can get you in serious trouble and prevent your bankruptcy petition altogether.
Think carefully before filing Chapter 7 bankruptcy. While Chapter 7 bankruptcy (irreversible insolvency) will effectively get rid of all your debts, allowing you to start afresh, it will also be on your credit report for 10 years. This will greatly reduce your chances of getting any type of credit in the future. Consult with a bankruptcy attorney – he or she may be able to suggest a different form of debt relief that won’t have such a damaging effect on your credit.
If you are sure that you are going to file for bankruptcy, you should stop making any payments towards debts, that will be discharged during the bankruptcy process. Since you will not be liable for these debts in the near future, it is of little benefit to you to keep making payments towards them. It would be more beneficial for you to save any spare cash, that you have for future needs.
Knowing that you are required to disclose anything that you have sold, given away or transferred in the two years prior to filing can help you avoid a costly mistake. Full disclosure is required. Not disclosing everything can land you in jail or a discharge of your personal bankruptcy petition.
Always make your loved ones a priority. Bankruptcy can really wear down your emotional reserves. It is lengthy, stressful and often leaves people feeling ashamed, unworthy and guilty. Lots of people choose to disappear for a while until the entire process is over and done with. This is not a good idea because staying alone could cause serious problems with depression. Therefore, meet this challenge head on and surround yourself with caring family members so you can get through this difficult financial situation.
For those who have never previously filed for personal bankruptcy or do not know anyone who has, the process itself may seem embarrassing, if not even shameful. However, bankruptcy filings have become quite commonplace, and pride alone should not cause the idea of filing to be disregarded by anyone who is on shaky financial ground. By using the advice contained in the above piece, it is possible to determine whether bankruptcy is a smart choice for you.