Don’t Let Bankruptcy Ruin Your Life – Read This Excellent Information

If you’re in financial trouble, and you see no other way out, you may be considering personal bankruptcy. Personal bankruptcy exists so that you can get a fresh start should you ever need one. This article has some great tips and advice on the subject of personal bankruptcy.

A huge mistake people make before filing for bankruptcy is maxing out their credit cards. This can lead to disaster when you file and the credit card companies might not discharge the debt. If you can, you need to stop using your credit cards at least six months before you file, and ideally for a year prior. Also, do your best to pay the minimum payments on these cards for at least six months before you file.

As bankruptcy appears on the horizon, don’t take your savings or retirement accounts to try to pay off all your bills. Do not tap retirement accounts unless there is no other alternative. You may need to tap your savings, but don’t empty your savings account, as this could leave you in a difficult situation down the road.

Remember you still have to pay taxes on your debts. A lot of people don’t realize that even if their debts are discharged in the bankruptcy, they are still responsible to the IRS. The IRS usually does not allow complete forgiveness, although payment plans are common. Make sure to find out what is covered and what is not.

Find a bankruptcy attorney who offers free consultations, and ask lots of questions. Most lawyers offer free consultations, so talk to a few before making your decision. Make a decision when all your concerns and questions have been addressed well by one lawyer in particular. There is no need to feel rushed to decide to file after you talk with your bankruptcy lawyer. Consulting with several attorneys will also help you find someone you trust.

Before you file for bankruptcy, make sure that you sort out your taxes. When you file, the bankruptcy trustee will need to see your tax return from last year and possibly even your tax return from two years ago. If you have these documents ready, your bankruptcy attorney will be able to ensure that the whole bankruptcy process is carried out as quickly as possible.

Personal bankruptcy should be a last resort if you’re in insolvency. This is due to the fact that it will take years for the bankruptcy to work off your credit report and new law changes make it harder to escape paying the debts off. In other words, you could have bankruptcy on your credit report and still be paying off several of your debts.

Be certain that you can differentiate between Chapter 7 and Chapter 13 bankruptcy. Under Chapter 7 type bankruptcy, all debts are forgiven. This includes creditors and your relationship with them will become no longer existent. Chapter 13, on the other hand, involves a five year payment period before any remaining debts are cancelled. It is important that you understand the differences between the different types of bankruptcy, so that you can decide which option is best for you.

Now that you’ve come to the end of this article, you can see that filing bankruptcy is not so scary, as long as you know what you’re doing. Apply what you’ve learned here, and you’ll be in control of your finances once again. Enjoy the fresh start that you deserve.