April 20th, 2009 | by admin |
by Josh Ramos
If you’re thinking about declaring yourself bankrupt in order to solve your debt problems, you want to make sure you consider all of your bankruptcy alternatives carefully before you make the final decision. You may find that you’re able to eliminate your debt through other methods such as negotiating with credit card companies and getting a part time job.
Even a balance transfer can provide a little bit of relief because it can give you a low interest rate. However, this kind of strategy is tricky.
Many times the lower interest rate is only temporary, and this entire strategy will do you absolutely no good if you continue to spend your money indiscriminately. Your debt will simply continue to grow.
Sometimes these techniques are simply not enough to bring you out of the hole that you dug for yourself. In this case, the bankruptcy may be your only option, but you shouldn’t panic if this is where you find yourself.
You do need to make sure that your decision has been well researched and that you understand the basic process. That doesn’t mean you want to go through the whole process by yourself, since things are far too complicated for a layperson.
Congress passed a new bankruptcy law in 2005 which added additional restrictions that your lawyer should be familiar with. Despite what many may think, this law did not eliminate bankruptcy as an option, but it did make the process more complex. You need a good lawyer now more than ever. In addition, each state has its own laws regarding bankruptcy.
Some states may give you unlimited homestead exemption, which means you get to keep your house safe from creditors no matter how much your house is worth (or how much you owe).
The homestead exemption, by the way, protects your house from creditors if you file for bankruptcy. For example, if you’re trying to get rid of tens of thousands of dollars of credit card debt, your creditors cannot go after your house if your state has a homestead exemption. Of course, you still have to pay your mortgage, and you may still have to deal with foreclosure if you don’t pay your lender for your house payments.
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Tags: bankruptcy, credit, financial, Personal Bankruptcy