Tips For Starting Over After Personal Bankruptcy

debt-2754176_1920Bankruptcy can make or break an individual. Depending on how it is handled however, you  can recover and save your financial life. Conversely, you can also never recover and be stuck in an endless cycle of debt for the rest of your life. Find out how to handle bankruptcy the right way.

First, do not underestimate the importance of timing. If you are considering filing for bankruptcy, the goal is to wipe out as much of your debt as possible. Therefore, it doesn’t make sense to file bankruptcy if you’re still accumulating major charges. For example, if you are still  receiving medical expenses from an operation, you will want to wait until all the expenses have been charged before actually filing for bankruptcy.

Also, try to keep the positives of filing for bankruptcy in the forefront of your mind during the process. Many people will spend days, weeks, or even months focusing on the negative aspect of declaring bankruptcy. By focusing on the positive aspects of filing for bankruptcy, you will be able to get through the entire process with a sense of relief and gratitude.

Another useful tip for those thinking about filing for bankruptcy is to keep in mind that any damage to your credit score caused by the filing of personal bankruptcy is only temporary. While your score will take a noticeable hit after your bankruptcy discharge, it also offers you a clean slate to re-establish your credit. You actually have the ability to put yourself on stronger financial footing going forward in life. Do not take this new responsibility lightly.

Credit agencies such as Equifax and Experian do not always stay on top of things, so when it comes time to removing your bankruptcy from your record be sure you stay on top of this. If you notice that your bankruptcy is not taken off your records, make a copy of your discharge notice, along with a physical letter requesting that they remove this. Make sure the letter is certified, so that someone has to sign for it acknowledging it’s receipt.

Most people do not know that there is more than one option when considering bankruptcy. The two primary types for personal bankruptcies are Chapter 7 and Chapter 13. Chapter 7 should be considered when there is serious financial trouble. It assists you in liquidating all appropriate assets and eliminating large debts from your life. If there is a possibility with structured payment plans that you can use to repay your creditors, then you may wish to consider Chapter 13, which will enable you to keep some of your assets, such as your house.

Do not ever be afraid to file for bankruptcy. Sometimes people find themselves so overwhelmed with debt that they just decide to do nothing and bury their heads in the sand. This is the worst thing that a person could possibly do. Instead, you should file for bankruptcy because by doing so, you are taking a positive action and giving themselves another chance at managing their finances.

Carefully weigh the pros and cons before filing for any bankruptcy. There’s a good chance that filing for bankruptcy may not be your best option. Before you do anything else, sit down and make a list of the pros and cons about bankruptcy. Think them over and get a second opinion on the matter from a trusted family member. Then, consult with an attorney and listen to their professional opinion as well.

Understand that income tax should not be paid on any debt discharges. This will save you a lot of money when it comes time to pay your taxes. Be sure to check with a tax specialist before you submit your taxes for that fiscal year.

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 as agreed.

Prepare yourself prior to filing by hiring a lawyer to pursue your bankruptcy. You should gather all of your records pertinent to filing such as an itemized list of your assets, lists of bank accounts, property deeds, and any other financial information. You should also have your last three years tax returns handy for reference.

Trying to exclude family members you owe money to before filing for personal bankruptcy can get you into serious hot water. The court will look into who you pay off as far as a year back, and if they find you showing favor to family over other creditors, they could invalidate your filing completely.

Always speak with an attorney. If you’re filing for bankruptcy, spending more money is probably the last thing on your mind. Investing in a good attorney, however, can end up saving you a lot of money in the long run. Don’t take any unnecessary risks when it comes to your finances.

Remember, anyone can survive bankruptcy, or they can let it ruin their life. There is a correct way and a wrong way to approach your bankruptcy, and hopefully, you now realize the right way thanks to the tips in this article. Use them wisely and eliminate your bad debts with ease.

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