It can be very hard to live with a personal bankruptcy filing. When you’re constrained financially, your options become limited, in general. Even without perfect credit, you can still get the loans you need.
If you are thinking about paying off your tax obligations with a credit card and then filing bankruptcy, think again. Credit card debt is handled charge by charge during bankruptcy, and in most states, tax debt cannot be discharged through bankruptcy. Generally speaking, debt incurred to pay taxes and the tax bills themselves are treated the same in a bankruptcy. So it does not help you to put the tax bill on your charge card if you know the debt will be discharged anyway.
Do not hesitate to remind your lawyer of any details regarding your case. Chances are that you may have forgotten to tell them about certain specifics that may be important to your filing. Do not hesitate to speak up; this is your hearing and your future is on the line.
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. It is sometimes possible to negotiate smaller payment by yourself. If you do this, make sure you save a written record of debt modifications that are negotiated.
Protect your home. It isn’t inevitable that you will lose your house when you file for bankruptcy. If your home has significantly depreciated in value or you’ve taken a second mortgage, it may be possible to retain possession of your home. There are other options such as a homestead exemption which offers you a chance to remain in your home, depending on whether or not you meed certain financial conditions.
If your income exceeds your obligations, you should not seek bankruptcy protection. It can seem like bankruptcy can be an easy way to avoid paying back your debts, however it leaves a serious mark in your credit report that can last between seven and ten years.
Don’t automatically assume that bankruptcy is your only option. 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. If you are about to lose your house, talk to your lender about a loan modification. The lender may be willing to reduce interest rates, eliminate late charges or extend the life of the loan. When push comes to shove, creditors want their money, and they are willing to make concessions to get it and prevent the debtor from declaring bankruptcy.
Bankruptcy is a step that many people have to take, and as you can see, it’s not a permanent black mark. If you are willing to work hard to save money and do not spend frivolously, you can regain your credibility with creditors. Start saving to see just how much of an impact the change makes when people see you go for a home or car loan.