Simplifying The Bankruptcy Red Tape For You

When in a financial low, you make wonder if bankruptcy is the best choice. Don’t worry, you are not alone. Countless individuals have determined that bankruptcy is the best way to alleviate their personal financial burdens. So have a look through the contents of this article to see what you should know about bankruptcy.

If you are considering using credit cards to pay your taxes and then file for bankruptcy, you may want to rethink that. Most of the time, you won’t be able to discharge this debt, and you could make things worse with the IRS. In most cases, you can use the adage that “a dischargeable tax is a dischargeable debt.” If you live in an area where tax can be discharged through bankruptcy, financing your tax bill is pretty pointless.

Be sure you’re doing what’s right before you file for bankruptcy. Avail yourself of other options, including consumer credit counseling, if they are appropriate for your situation. Bankruptcy is a serious negative on your credit history so make sure you have no other options before you file. It is important to keep your credit history as positive as possible.

There are two types of personal bankruptcy: Chapter 7 and Chapter 13. Make sure you know what each entails so you can make the right choice. In Chapter 7 bankruptcy, your debts are all eliminated. All of your financial ties to the people you owe money to will disappear. If however you enter Chapter 13, you will go into a five year repayment program prior to your debts dissolving entirely. It is vital that you know the differences between these types of bankruptcies, in order to find the option that’s best for you.

Before making the decision to file for bankruptcy, be sure you have considered alternative options. For example, you want to look into credit counseling. This is the best option for small debts. You should also try negotiating a payment plan with your creditors; make sure you get a written agreement of the new payment plans.

As stated in the article above, bankruptcy is a common way for many people to alleviate their troubled financial situation. Unlike other people, you’ll be more educated because of this article. Apply the knowledge from this article to go about your bankruptcy in a smooth fashion.