Bankruptcy is serious, and should not be looked at as something that isn’t a big deal. It is important that you understand everything involved in filing bankruptcy. Make sure to use what you learned from this article to make the right decisions. Research can surely help you even though you have tough decisions coming your way.
There are many ways to resolve financial difficulties other than bankruptcy, and you should investigate all of them first. You can get your interest rates reduced or enter into a debt repayment plan. Before you file bankruptcy, ask your attorney if any of these are viable alternatives for you. For example, if you are in talks of foreclosure, you could use a modified loan to overcome your debt. Your lender can adjust your loan in many ways including extending the time you have to pay, reducing your interest rate, or canceling some of your late fees. Making arrangements with the creditors to make reasonable payments towards you debt is a much better plan than bankruptcy because the lender simply wants the loan repaid.
When you have reviewed all of your options and found that bankruptcy is the only viable one, be sure to find out everything there is to know about bankruptcy laws in your state. In order to protect your financial future, you are advised to talk with your attorney and learn as much as you can about the bankruptcy process.
If you find out that you don’t qualify for the Homestead Exemption after filing Chapter 7 bankruptcy, you may be able to file Chapter 13 in addition for your mortgage. In some situations it might be better if you convert the whole Chapter 7 bankruptcy into Chapter 13. In this case, you should consult with your attorney to decide on your next step.
Rest assured, when you file for Chapter 13 bankruptcy, you still have the ability to take out mortgage and car loans. However, the process of approval is a bit more stringent. You have to meet with your trustee to get approval for the new loan. You will need to come up with a budget and show that this new loan payment schedule is doable. You will also need to explain why it is necessary for you to take out the loan.
If the bulk of your financial problems includes your student loans, bankruptcy may not be the simplest option for you. The rules are different in many states, but student loans are some of the most difficult types of debt to get discharged. You need to demonstrate “undue” or “extreme” hardship in order to discharge student loans.
When you realize that you probably will file for bankruptcy, do not pay your creditors or try to avoid bankruptcy by spending all of your regular or retirement savings. Leave your retirement accounts untouched unless there is absolutely no other alternative. While you may have to use a part of your savings, never completely wipe it out which would only leave you in worse financial shape in the future.
Try getting another job. As long as you have money coming in and use it to pay down your debts, you will likely be able to work with your creditors and make your own repayment arrangements. They may be willing to set up a time frame to pay the money back and in the meantime there won’t be a need to claim bankruptcy.
Do your homework first before you decide to file for personal bankruptcy. Analyze your situation when it comes to debt as you determine which type of debt can be easily discharged under bankruptcy. There are debts that are not dischargeable. For example, a credit card debt consisting of nonessential purchases incurred within three months of the bankruptcy declaration cannot be discharged. Always keep up with the laws your state has placed in effect.
Consider if Chapter 13 bankruptcy is an option. If you have less than a quarter of a million dollars in debt that is unsecured and a regular income, you are eligible to file a Chapter 13. That way, you can hold onto your personal assets and pay back a portion of your debts pursuant to an approved plan. These kinds of plans usually range across 3, 4 and 5 years. Once this is done, all your unsecured debt will get discharged. Remember, though, that if you fail to make even one payment, the case will be thrown out and you’ll be right back where you started.
This article outlined a few different types of personal bankruptcy. Don’t let the amount of information overwhelm you! Take time to think about what you have read here. By taking your time, you will make the best decisions.
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