When the IRS comes knocking at the door, it’s hard to tell what they’re going to take. Unfortunately, you may not have enough to give. This is where bankruptcy can help you out. Bankruptcy can have a major effect on credit; but, at times, is the only choice. Continue reading this article to understand what you need to know about bankruptcy and the likely end result of going through one.
Do not use a credit card to manage your tax issues and then try to file bankruptcy. The fact is that the credit card debt will be ineligible for discharge, and your tax debt may increase. Bear this in mind; if the tax can be discharged, then the debt can be as well. Thus, it doesn’t make sense to use a credit card when it is going to be discharged when you file for bankruptcy.
Use a personally recommended bankruptcy attorney instead of one found through the Internet or phone books. Some companies just want to take advantage of you, so it is important that you have help from someone you trust.
Seek a less serious option prior to filing for bankruptcy. You could find relief from small debts by using a consumer credit counselor. You should also try negotiating a payment plan with your creditors; make sure you get a written agreement of the new payment plans.
Understand the differences between Chapter 7 and Chapter 13 bankruptcy. If you file for Chapter 7 bankruptcy, all of your debts will be eliminated. This includes creditors and your relationship with them will become no longer existent. Chapter 13 is different, though. This type of bankruptcy entails an agreement to pay off your debts for five years prior to wiping the slate clean. It’s important to know what differences come with every type of bankruptcy. This will let you find out what’s best for you.
Don’t hide from your friends and family while you go through bankruptcy. Bankruptcy proceedings can be extremely harsh. It takes a long time, it can be stressful, and people feel unworthy, guilty and ashamed. A lot of folks decide to hide themselves from the world around them until the end of the process. But, isolating yourself from others could bring out more depression. For this reason, if you are undergoing personal bankruptcy proceedings, you must continue to live a normal life, spending time with your friends and relations.
Be aware of the fact that you may be under a great of stress while you deal with your bankruptcy. Look for a good attorney who can help you through the process. Look beyond the fees a lawyer charges when you make your hiring decision. Think about quality rather than cost when hiring an attorney. Ask your friends, relations and acquaintances who have shared your experience to give you referrals to good lawyers. You could even attend a court hearing to see how an attorney handles his case.
If you are thinking about filing for bankruptcy, one of the first things you should do is look into the laws of your state. For instance, a filer cannot transfer assets to someone else for at least a year before filing. It’s also prohibted to run up debt on credit cards just prior to filing.
As mentioned earlier, filing a personal bankruptcy is an ever-present alternative. But, you need to look at all of your options rather than jumping into bankruptcy head first. Bankruptcy has negative ramifications that can effect you for awhile. Learning how to manage this situation can minimize your headaches and prevent repossession of valuable property.