Bankruptcy causes short-term stress, but if you’re responsible, it can be a relief in the long term. You will be forced to expose your financial life to outsiders, and you will have to sift through all of your assets and obligations. On the other hand, you enjoy peace when the bill collectors stop calling you. Take a look ahead to figure out more about bankruptcy.
Watch your lawyer fill out your paperwork carefully. They, most likely, have multiple cases going on simultaneously and may not be able to keep up with every detail of your case. Be sure to read all of that paperwork carefully to ensure that everything is filled out correctly.
Know what debts can be forgiven. You may hear that you have to pay a certain debt and that it cannot be discharged, but that information will usually come from a bill collector. Student loans, child support, and other debts cannot be discharged, but most others can.
Be fully educated about the rules of bankruptcy. If the courts were to find that you have disregarded any of the rules in place, your petition could be dismissed. Laws prohibit picking and choosing some debts to pay off before filing for bankruptcy. Family members cannot be paid off within one year of filing, and creditors are limited to ninety days.
Know the difference between Chapters 7 and 13 bankruptcies. Chapter 7 will clean your debts, meaning you will not owe what you file against. Chapter 13 requires you to agree to repay your debts. These debts need to be repaid within three to five years of the filing date.
Always protect your house. Filing for bankruptcy does not always mean you will lose your home. There are mitigating factors, such as loss of value or multiple mortgages. You could also check out the homestead exemption. This lets you continue living in your house, depending on whether you meet certain financial requirements.
If you are unsure about the paperwork, you need to bring when you meet with an attorney, ask. Also, inquire whether the lawyer you are meeting with offers free consultations. You do not want to be surprised by a large fee just for them to look at your case.
After completing filing for bankruptcy:
- Get to work reestablishing your credit score.
- Remember that thirty-five percent of the credit score is calculated using payment history.
- Keep your payments on time because you will have to battle the bankruptcy on your report for the next ten years.
If you have co-signers on car loans or others responsible for your bills, consider filing for Chapter 13 bankruptcy if you want to help them. If you file for Chapter 7, you may not have to pay anymore, but they are still responsible. Talk to the people involved, and think carefully before making a choice.
Fight the temptation to rack up large credit card balances just before filing. The creditor will take a look at your account history. If they determine that you charged a lot before applying for bankruptcy, they can file a request with the court to hold you responsible for the amount that you charged.
Start taking calls from bill collectors. You may have avoided calls from bill collectors, but you may need to speak to them if you are filing bankruptcy. It would be best if you had all of your debts laid out so that your lawyer could get to work involving them in your case. If you don’t include a debt, it will not be discharged, and you will still have to pay it.
Visit your primary care doctor for a complete physical before filing for bankruptcy. If you wait until after you begin the process, you will not be able to claim your medical bills on your bankruptcy. This is especially helpful if you do not have health insurance.
Do not hide assets while you are preparing to go through bankruptcy. It may be tempting to take home and other property and place it in a spouse’s name, but you will face charges of fraud if you get caught doing that. The penalties are jail time and fines.
If you are over the age of 55 and filing for bankruptcy, you are not alone. This age bracket is the most likely to file. Luckily, retirement savings held in retirement accounts and IRAs are not in danger of being depleted in bankruptcy filings under one million dollars.
Make sure to comply with the educational requirements for bankruptcy. You must meet with an approved credit counselor within six months before filing. You have to take an approved financial management course. If you don’t take these courses in time, the court will dismiss your bankruptcy.
Consider hiring an attorney to help you. The laws surrounding personal bankruptcy can be complex at best and confusing and convoluted at worst. If you feel unsure of how to move forward, consulting with an attorney may be the best move you can make. An attorney can be the guiding hand you need to make the process as smooth as possible.
Do not allow future creditors to charge you ridiculously high-interest rates due to a past bankruptcy. If it has been more than two years since the bankruptcy and you have been doing well since you filed, you are eligible to receive a loan at whatever the going interest rate is.
Bankruptcy is both good and bad; it depends on perspective. Regardless of your reasons for filing for personal bankruptcy, remember that it is a process that can be extremely helpful if you are well informed. The tips you have just read are a great guide to making the bankruptcy process smooth. Make good use of these tips. You will be glad you did.
