The Pros And Cons Of Filing For Personal Bankruptcy

The specter of bankruptcy can cause many individuals to break out in a cold sweat. Growing debt, along with insufficient income to support a family, can make life seem unbearable. If you're afraid of this scenario (or worse if you are living at), it is our sincere hope that the advice given here will be of help to you.

Don't pay tax requirements with your credit cards with the thought of starting the bankruptcy process afterward, without doing your research first. In many parts of the country, you cannot get this debt discharged, and in the end you will be left owing the IRS a big sum of money. The main thing to remember is that dischargeable taxes are the equivalent of dischargeable debts. So, there is no reason to use your credit card if it will be discharged in the bankruptcy.

Before you proceed with your personal bankruptcy case, review your decisions to be certain that the choice you are making is the right. Alternatives do exist, including consumer credit counseling. Bankruptcy has a negative effect on your credit reports, in that it is permanently there. Before you take this step, make sure all your options have been considered.

When it gets time to think about bankruptcy, avoid using your retirement or savings to pay off the creditors or even make attempts to settle the debt. Retirement accounts should never be accessed unless all other options have been exhausted. Although it is quite normal to use some of your savings, ensure that you leave enough in your account for emergencies.

Always be honest with the information you give about your finances. You might feel tempted to not declare certain assets in your bankruptcy in order to protect them from forfeiture, but if you're found out, the process could take longer, or worse, you might be banned from filing for bankruptcy completely.

If you are seriously thinking of filing bankruptcy, make sure that you contact an attorney. There are a lot of things to do during bankruptcy and that may be hard for you to understand on your own. A qualified bankruptcy attorney will guide you through the steps and help you do everything properly.

Stay abreast of new laws that may affect your bankruptcy if you decide to file. Bankruptcy laws are in constant flux, so just because you knew the law last year doesn't mean that the laws will be the same this year. To learn about any changes, search the Internet or contact your state's legislative office.

The two main kinds of bankruptcy are Chapter 7 and Chapter 13. Make sure you understand them so you know what is best for you. Chapter 7 eliminates all debts. All the things that tie you to creditors will go away. A Chapter 13 filing involves a repayment plan, though. Typically, you will make a partial payment against your debts over the next 60 months before the balance of the debts is lifted. You must know about the different bankruptcy types, and how each can affect you.

Filing for bankruptcy can be a very scary and intimidating experience. While you may have been frightened of bankruptcy in the past, you don't need to be scared anymore. This article has armed you with information. By using the tips and information you've gathered here, you will be able to face your fear head on and look forward to a brighter financial future.