Personal Bankruptcy Alternatives
Bankruptcy is stressful, but it can provide financial relief.
You will have to thoroughly review your finances and allow
strangers to scrutinize them even harder; this is naturally
stressful. But, you will also have the opportunity to get a fresh
start, rid yourself of bill collectors and start rebuilding your
credit. Take a look ahead to figure out more about bankruptcy.
Before filing personal bankruptcy, consider other options. You may
want to consider credit counseling. There are a lot of
organizations that are non-profits and can assist you. They can
speak with your creditor about getting your payments and interest
reduced. The payments you make go to the credit counseling
company, and they send that money to your creditors.
You might find it hard to file successfully for bankruptcy, if
your primary debt issue are your student loans. This is because
most student loans come from government, and you better believe
that the government wants its money back, plus interest! In order
to be successful in discharging your student loans, you must prove
"undue" or "extreme" hardship.
As you are heading towards a bankruptcy filing, don't be tempted
to run up cash advances on your credit cards in the belief they
will be erased in the legal proceedings. This is illegal. It's
fraud, and you can still be responsible for paying it back even
after declaring bankruptcy.
To start rebuilding your credit after a bankruptcy, consider
opening new lines of credit. Since high interest rates are a
problem after bankruptcy, try a secured credit card. These types
of credit cards may charge very high interest rates, but your
score will probably have to improve before you can get a
lower-interest-rate card. You will be more likely to get new loans
or credit facilities when you have a new credit line established.
See to it that you are aware of the laws concerning bankruptcy
before you consider filing. Did you know that in some areas, you
cannot transfer assets from yourself to another person in the year
previous to filing occurring? It is also against the law to max
out your credit cards before filing for bankruptcy.
Banish the word "shame" from your vocabulary before you file for
bankruptcy. Often, with bankruptcy, come feelings of guilt, shame
and worthlessness. Do not let these negative feelings influence
your decision. Keeping an optimistic view as you deal with your
financial woes is the most productive way of dealing with a
You may end up losing more than you bargained for when you file a
bankruptcy claim, so be sure that you know just which assets may
be taken before filing. There are some assets that cannot be
seized through bankruptcy, and the law lists those assets. Many
belongings may become eligible for repossession or seizure after
filing for bankruptcy. Without reading the list, you may be
shocked at which possessions can be taken from you.
Do not drag your feet when trying to figure out if bankruptcy is
right for you. It's very difficult admitting you need help, but
waiting too long can actually make it worse. Going to a lawyer as
soon as you can is the best to remain in control of your
Put your credit cards away if you are contemplating bankruptcy in
the near future. You may be very tempted to buy a lot of stuff;
however, this will not make the courts happy. Take responsibility
for your debt in whatever way you can. It's a good time to start
developing good financial habits for the future.
Don't file for bankruptcy without knowing your rights. Collectors
may try to convince you that your debt can't be discharged. There
are a few debts that cannot be cleared, such as student loans and
child support, but be sure to know the details when dealing with
debt collectors. If a debt collector tells you this false
information, seek the advice of your bankruptcy attorney. You may
also want to report the bill collector to the attorney general's
Filing for bankruptcy may damage your credit less than missing
debt payments. Though it will still mar your credit history for up
to 10 years, the damage can be improved. Getting a fresh start is
one benefit of bankruptcy.
Don't use credit cards to pay your taxes if you're going to file
bankruptcy. The fact is that the credit card debt will be
ineligible for discharge, and your tax debt may increase. If the
tax can be discharged, so can the debt. So, in short, do not use
your credit cards to pay off debts right before you file for
If it looks like you're in for a big hit on your taxes, don't
necessarily assume bankruptcy is a way out for you. There are
those filers for bankruptcy who have used a credit card to make
tax payments and then filed for bankruptcy. Do not assume that the
credit card debt you incurred by charging your taxes will be wiped
out with a bankruptcy filing. However, this is already expressly
forbidden in bankruptcy law, and you will be stuck with the taxes
and the interest that is accruing on the credit card.
Bankruptcy is both a good and a bad thing; it depends on
perspective. Regardless of your reasons for filing for personal
bankruptcy, remember that it is a process that can be extremely
helpful if you are well informed. These tips can make dealing with
bankruptcy easier. If you use these tips, you can file for
bankruptcy with the confidence that only information can instill.