It can be challenging to face the prospect of bankruptcy. The options available to you when your finances are challenged can be quite limited. Even with a bad credit score, it is still possible to overcome financial hurdles, as you will see if you keep reading.
Filing for bankruptcy is something many people are forced to do when there debts become too much of a burden, and they can no longer afford to pay them. If this is your case, you should do some research about bankruptcy laws in your state. Each state has their own bankruptcy laws. Your home and other major assets may be protected in your state, while they are vulnerable in other states. It is best to become familiar with your state's laws regarding bankruptcy before you take the steps to file.
Always be honest when filling out paperwork. 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.
Don't feel bad if you need to remind your attorney about any specifics of your case. Don't just assume that the attorney will remember it automatically. Ultimately, this is your bankruptcy and your financial future, so never hesitate to advocate on your behalf.
Rather than checking online, try to get recommendations from friends or family about a suitable bankruptcy attorney. Bankruptcy attracts a lot of fly-by-night firms that take advantage of desperate people, and a word-of-mouth recommendation makes it more likely that your bankruptcy will go smoothly.
Check into less drastic solutions prior to declaring bankruptcy. If your debt is relatively low, you may be able to manage it with credit counseling. Also, if you just contact your creditors and speak to them plainly and truthfully, the odds are good that you can negotiate a better payment structure that you can afford.
Chapter 13 bankruptcy might be a good option, so don't overlook it. You are eligible to file Chapter 13 bankruptcy if your income is reliable and your unsecured debt does not exceed $250,000. Filing for this type of debt will ensure that you can hold onto your real estate and personal property, and will let you develop a consolidation plan to pay off your debts. Generally, this stays in effect for up to 5 years. Afterwards, your unsecured debts clear from your accounts. Bear in mind that if you miss a single payment that is due under your plan, the entire case will be dismissed by the Court.
If your paycheck is larger than your debts, avoid filing for bankruptcy. Although bankruptcy might seem to be an easy way of being able to pay for your debts, you must remember that it is something that will remain roughly about 7 to 10 years in your credit report.
During a Chapter 13 bankruptcy, you may still be able to get a mortgage or car loan. This is a lot harder. Your bankruptcy custodian will need to approve the loan. Document your budget to prove that you're going to be able to make the payments. Also, be sure you have a clear explanation as to why the item you are purchasing is absolutely necessary.
Bankruptcy is a step that many people have to take, and as you can see, it's not a permanent black mark. When you show good faith and you're repaying your debts, this effort will be noticed in a positive light by the creditors. Keep adding to your savings and you may be pleasantly surprised when you next seek a auto or home loan.