If you are thinking about bankruptcy and haven’t made a final decision about it yet, it’s important that you know what is involved. If you are not a bankruptcy lawyer, you, more than likely, have not dealt much with bankruptcy law. Here are some quick tips to help you understand what you may go through.
Bankruptcy is a very complicated, and scary process. Usually anyone who applies for it, is at the end of ones rope. To help you feel more in control of things, be sure to educate yourself about the entire process before making your decision. Learn the requirements you have to meet before applying.Learn about what the process will be when you do apply.Finally, learn how your future will be affected by it after you file.
If you are considering using credit cards to pay your taxes and then file for bankruptcy, you may want to rethink that. Most of the time, you won’t be able to discharge this debt, and you could make things worse with the IRS. Keep in mind that if the tax debt is eligible to be discharged, then the credit card debt is also dischargeable. So as you can see, in this situation there is no need to use the card when the debt will be discharged when you file for bankruptcy.
Start planning for your life after bankruptcy now. The entire process can be very overwhelming, and leave you feeling like you have few to little options. You begin rebuilding your financial future right away. Get solid advice from trusted sources, be prepared to work hard at it, and most importantly, don’t be afraid to dream again!
Many times, when a debtor files for Chapter 7 bankruptcy, their home can be protected. This is because of the homestead exemption. This exemption can protect the home, if the debtor owes below a certain threshold. Laws concerning this exemption do vary between states. Be sure to consult with a bankruptcy attorney before, assuming your home is safe from liquidation.
Become educated about personal bankruptcy. You must realize that the IRS will tax forgiven debt in a bankruptcy. The rules can be confusing, so be sure you learn all that you can before you file. You can find out more about this by doing some research, either by talking to finance professionals or looking online.
Filing for bankruptcy is not the best choice if your monthly income is enough to cover your bills. Although you may see bankruptcy as a free pass to eliminate your debt, if you can slowly whittle away at your debt with your income, it will be much better than killing your credit score with a bankruptcy filing.
A better understanding of what happens during bankruptcy is a good idea before you decide to file. By knowing what to expect, you can make a better decision about what choice is right for you. Hopefully, the tips laid out here can help you understand the process better, so that you know what to do.