While bankruptcy is often a last-resort measure, sometimes it’s simply unavoidable. Bankruptcy totally destroys your credit, but in many cases, people have no choice but to file. Pay attention to what this article is teaching you about bankruptcies and their pitfalls.
Don’t naturally think every single one of your debts is going to be forgiven if you take Chapter 7. You may need to reaffirm certain secured debts. As a result, you must sign another agreement that says you’ll repay them. In addition, under certain circumstances, some debts can’t be discharged. For instance, court-sanctioned fines cannot be discharged under Chapter 7. The same goes for child support and alimony payments.
Be as honest as you possibly can when filing for bankruptcy; hiding liabilities or assets will only hurt you in the long run. It is necessary to be open regarding both the positive and negative aspects of your financial life. Telling the truth will allow you reach a solution that is feasible, given your current situation.
Consider if Chapter 13 bankruptcy is an option. If your source of income is regular and your unsecured debt is less than a quarter million, Chapter 13 bankruptcy is something you are able to file for. Declaring bankruptcy can assist you in consolidating your debt so you can repay it more easily. Generally, this stays in effect for up to 5 years. Afterwards, your unsecured debts clear from your accounts. Just know that missing one payment could cause your case to be dismissed.
Don’t automatically assume that bankruptcy is your only option. You may qualify for alternatives such as debt repayment plans or interest rate reductions. Ask your bankruptcy attorney about these options. Loan modification can help you get out of foreclosure. This type of plan allows your lender to work with you eliminating charges, extending your loan, and lowering interest rates to help you pay back the loan without drowning in debt. When all is said and done, creditors want their money and find repayment plans preferable to not getting paid at all.
It is important to protect your home when filing bankruptcy. Bankruptcy doesn’t always mean you’ll lose your home. You might be able to keep your home, for instance, if you have two mortgages or if your home has lost its value. Another option is the homestead exemption that has certain income and financial requirements, but may also allow you to keep your home.
It is important to consult with an attorney who specializes in bankruptcy if you are headed toward bankruptcy. The complexities of the process of filing, court proceedings and other issues can best be handled by a competent lawyer. A good bankruptcy attorney will answer your questions and help you in filling out and filing your paperwork.
Many bankruptcy lawyers offer free consultations, so go to several before choosing one. Never settle for speaking with a paralegal or an assistant. They are not trained, nor allowed, to pass on legal advice. Be sure to check out a number of lawyers so that you will find one who is just right for you.
Be sure you know what the difference between Chapter 13 and Chapter 7 bankruptcy is. Do some research about these options so you can choose the best one. If the information you read is unclear to you, take the time to go over the specifics with your lawyer before making a decision on which type you will want to file.
As was stated before, the option of filing for personal bankruptcy should be kept open. It should be said that all other avenues should be explored before damaging your credit with a bankruptcy. The best way for someone to avoid financial stress and hold onto their possessions is by learning more about bankruptcy