Once you are faced with the possibility of losing treasured items like jewelry or cars, this can make you shy away from the IRS. Stop the calls from your creditors, and look over your finances. You may discover that you need to file for bankruptcy. This article has tips that can help you through this complicated journey.
The primary catalyst for filing personal bankruptcy is having a large amount of debt that can’t be readily repaid. If you find yourself going through this, you should know all about the laws that are in your state. Laws differ from one state to the other. In some states, your home is protected, while in others it is not. It is important to be cognizant of the laws in your state before filing for bankruptcy.
If you are considering paying your taxes with credit cards and turning around and filing bankruptcy–they are on to you. Most states do not look at this debt as chargeable, and you could end up owing money to the IRS. Generally speaking, debt incurred to pay taxes and the tax bills themselves are treated the same in a bankruptcy. So, in short, do not use your credit cards to pay off debts right before you file for bankruptcy.
Before you file for bankruptcy, carefully consider if it is the right option for you. Other available options include consumer credit counseling. Bankruptcy is a permanent part of your credit, so before you make such a big decision, you might want to explore all other choices so that your credit history is affected as minimally as possible.
If you are going through a bankruptcy do not fall victim to guilt and pay off debts that you do not need to pay. Retirement accounts should never be accessed unless all other options have been exhausted. While dipping into your savings is likely to be necessary, avoid wiping it out completely to prevent leaving yourself with little financial security in the future.
Prior to filing for bankruptcy, research which assets will remain exempt from creditors. The federal statutes covering bankruptcy can tell you exactly which assets are exempt from forfeiture to pay off creditors. Make sure that you review this list before you decide to file, to see if you can hang on to your most important possessions. It is important to know what types of possessions may be taken away before they actually are seized.
Your most important concern is to protect your home. Filing for bankruptcy does not guarantee that you will lose your house. You might be able to keep your home, contingent on certain factors, such as your home decreasing in value or having a second mortgage. Otherwise, look into the homestead exemption which may allow you to stay in your home if you meet financial threshold requirements.
Make sure you know how to differentiate between Chapter 13 and Chapter 7. Take the time to learn about them extensively, and then figure out which one will be best for your particular situation. If there is anything that you don’t understand, go over it with your lawyer so that you can make the best decision.
Filing for bankruptcy is a possibility, but you should consider other options first. Avoid debt consolidation services and credit counseling services that seem too good to be true. Keep these tips in mind so you can avoid debt in the future.
Author: Eddy PriceThis author has published 1080 articles so far. More info about the author is coming soon.