Bankruptcy And The Middle Class

Jun 16th, 2013 | By | Category: Legal

A lot of people today have sunk into debt. They are harassed by collection agencies looking for them and they are really having trouble paying their bills. If this sounds like you and your situation, you might want to think about filing for personal bankruptcy. Continue on to the article to find out if bankruptcy is something you need to consider.

Be certain you understand all you can about bankruptcy by using online resources. Department of Justice and National Association for Consumer Bankruptcy Institute are two such places to look.

Don’t think that loading up your credit card with tax debt and then filing for bankruptcy is an answer either. In most states, this is not dischargeable debt. Therefore, you will end up owing the IRS a lot of money. Bear this in mind; if the tax can be discharged, then the debt can be as well. There isn’t any reason to use a credit card to pay the tax bill since the bill can be discharged anyway.

You have other options available like consumer credit that consumers can use. Bankruptcy will leave a permanent scar on your credit report and before you take this huge step, you should search through every available option first, you want to exhaust all other options so that the future effects on your credit history are as minimal as possible.You should not use your IRA or 401(k) unless there is nothing else you can do. If you do have to dig into your savings, make sure that you save some to ensure that you are financially secure in the future.

If you are truly faced with bankruptcy, avoid blowing your savings or retirement money, trying to pay off debts. Don’t touch retirement accounts unless you don’t have a choice. You may need to withdraw some funds from your savings account, but don’t take everything that is there as you will be bereft of any financial backup if you do.

You may still have trouble receiving any unsecured credit after filing for bankruptcy. If this is so, it is beneficial to apply for one or even two secured cards. This at least shows you to start building a good credit history while minimizing the bank’s risk. After a certain time, you may be able to get unsecured credit again.

It is possible to keep your home. Filing for bankruptcy does not always mean you will end up losing your home. It may be possible to keep your home if the value has depreciated, or there is a second mortgage. It can be worthwhile to understand the homestead exemption law to see if you qualify to keep living in your home under the financial threshold requirements.

The process for bankruptcy is hard. A lot of people become depressed and withdrawn until the entire proceedings have been played out. This is not a good idea because you will only feel bad and this may cause serious problems with depression.So, it is critical that you spend what quality hours you can with loved ones, regardless of the current financial situation.

If you are going to declare bankruptcy, hire a lawyer first. An attorney can offer valuable advice and help to simplify an extremely complex process. They will assist in all the necessary paperwork and cover all questions you have.

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