There is a tendency to throw all the varied kinds of bankruptcy into one pile when considering whether it may be appropriate to file for bankruptcy shelter. This is a dangerous misconception because there are many important differences from one chapter of the United States Bankruptcy Code to the next. Moreover, certain forms of bankruptcy are reserved for individuals and others are reserved for businesses. The failure to decently choose the proper form of bankruptcy protection for your specific situation can have an adverse effect on not only the approval or rejection of your claim But there are options out there for you. Don’t make the wrong mistake. But how to figure it out?
This is a pretty simple one to figure out, but it’s also a astonishingly common mistake made. Bankruptcy often gets a bad rap in our culture, but the truth of the matter is that, for many people, it is the absolutely best option to escape the stress of insurmountable debt and to gain a fresh financial start. It’s far easier to get things under control if you earnestly consider bankruptcy as soon as you realize that your finances have become too much for you to handle.
Some choose to use credit cards to try to avoid bankruptcy. Mostly, this is just not the right choice. First, you’re basically borrowing secured debt to pay off unsecured debt-not a good idea. Don’t forget, this method can put your house in jeopardy.
Using a 401(k), IRA, or other qualified tax deferred retirement account to “get out of debt” just isn’t the wisest thing to do. First of all, it puts your future financial security in jeopardy-which can really hurt you in the long run. Consider the fact that, while you may have no trouble getting a new or second job right now, later on when you’re retirement age it may not be quite as easy as it is now. Why risk the future? Also keep in mind that by cashing out a retirement account now, you will be taxed on that income which could take a bigger chunk out of your funds than you’re prepared for right now.
You must reveal all of your creditors on your bankruptcy filing. If you don’t do so, any debt you leave off (especially intentionally) will likely not be discharged along with the debt you did reveal. Additionally, you could risk having your bankruptcy case dismissed by the judge if it’s decided that you knowingly left any creditors off your petition.
Although this might seem like an extreme scenario, the point is that bankruptcy should not be viewed only as a last resort because it can save some valuable assets from creditors. Your household is often protected by a homestead exemption clause in your state, and pension plans and retirement monetary funds are usually also protected. If you are seriously considering filing for bankruptcy protection, you will most likely wish to consult with a reputable and experienced bankruptcy lawyer who can help guide you through the often confusing and complicated process. Having an lawyer on your side can provide you with the peace of mind that comes from knowing that you have all your bankruptcy bases addressed so you won’t unexpectedly be called “out” from missing a step
In total, there are six types of bankruptcy, although the ones that are likely to concern an individual are Chapter 7 and Chapter-. There are significant differences between filing for bankruptcy under Chapter 7 and filing for bankruptcy under Chapter-, so be sure to talk to a professional bankruptcy attorney before making your decision.
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