In order to file a bankruptcy claim, you will run into more than a couple of complicated hurdles to jump. Bankruptcies come in different types; what you choose is subject to your financial situation and the kind of debts that you have. That's why you should research personal bankruptcy prior to deciding whether or not you should file. Here are a few wise tips to help you in your decision.
When you feel certain that you must file for personal bankruptcy, refrain from squandering your life savings to pay off unsecured debt. Avoid touching your retirement accounts whenever possible. 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.
Find out what the homestead exemption limit is in your state before filing for Chapter 7 bankruptcy. If you have too much equity in your home to qualify for the exemption, you could lose your house in the bankruptcy. You can't change your mind once you've begun the process, so make sure you will be able to keep your home before you file.
Decide whether you want to file for Chapter 7, or Chapter 13 bankruptcy. As an individual, you may do either one. Find out as much as you can about each type of bankruptcy, so you are able to make a choice that you can live with in the future.
Before meeting with a lawyer, start compiling all of the documentation and paperwork you will need to provide an accurate picture of your finances. Gather six months' worth of pay stubs, bank statements, bills and credit card statements. Create a list of property and assets that you own. Having this entire information ready from the beginning can save you trouble when it's time to file.
If you lose your job, or otherwise face a financial crisis after filing Chapter 13, contact your trustee immediately. If you don't pay your Chapter 13 payment on time, your trustee can request that your bankruptcy be dismissed. You may need to modify your Chapter 13 plan if, you are unable to pay the agreed-upon amount.
The best way to build your credit up after a bankruptcy is making all your payments on time. If so, apply for a secured credit card. By doing this, you will be letting people know that you want to fix your credit score. In time, you might be granted unsecured credit again.
Consider Chapter 13 bankruptcy for your filing. You are eligible for filing bankruptcy under Chapter 13 if you work and owe less than $250,000. You can keep personal possessions, as well as real estate, while paying into a debt consolidation system. This lasts for three to five years and after this, your unsecured debt will be discharged. Just know that missing one payment could cause your case to be dismissed.
Protect your house. Bankruptcy filings do not necessarily mean that you have to lose your house. There are mitigating factors, such as lose of value, or multiple mortgages. It can be worthwhile to understand the homestead exemption law to see if you qualify to keep living in your home under the financial threshold requirements.
Never wait until the very end to act on personal bankruptcy. If you are like many people, it's very hard to face financial troubles. It's much easier to ignore them completely. But by doing so, you may create even more problems for yourself. Options that would have been open to you may now be closed. Reach out to a professional, as soon as, you know you need help.
Remember that until your bankruptcy is filed, you must not ignore any bill collectors or lawsuits by creditors that could result in wage garnishments. The same holds true of delinquent auto loans that can lead to repossession. Once the bankruptcy has been filed, you will be protected from these creditors, but until then, be sure to make timely payments or try to negotiate with them to avoid lawsuits, lost wages and repossessed property.
A better understanding of what happens during bankruptcy is a good idea before you decide to file. By knowing what to expect, you can make a better decision about what choice is right for you. Hopefully, the tips laid out here can help you understand the process better, so that you know what to do.