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4 signs it's time to file for bankruptcy

If you're like most potential bankruptcy filers, you've held on for as long as you possibly can. You may have even given up paying for your essential needs so that you can pay the money you owe on your credit cards. When push comes to shove, however, you may have no other option than filing for bankruptcy. Hopefully, you realize it's time to file as early as possible.

Here are four signs it's time to file for bankruptcy right now:

Is my home exempt from Chapter 7 liquidation?

Many people suffer under a mountain of debt troubles for years -- even though they can easily qualify for Chapter 7 bankruptcy -- because they're worried that filing for Chapter 7 will result in the loss of their home. However, in numerous situations, Washington state residents will not have to liquidate their residence, and they can keep the equity they've saved in their home, even after the successful completion of their Chapter 7 bankruptcy.

The attorney who represents you in your bankruptcy process, in fact, will make it his or her mission to safeguard as much of your personal property as possible -- including your home. Under certain circumstances, Washington homeowners can retain ownership of their home equity, which is the difference between what the home is worth and what they still owe on the property.

How to attack your credit card debt with everything you've got

One of the best ways to pay down your credit card debt as quickly as possible is to harness your financial resources, free up financial leaks and start directing all that cash to paying off your credit cards. Although this sounds simple enough, an action plan can help you stay focused on the most important aspects of this process.

Here's a 5-step action plan to pay down your credit cards:

  1. Understand that this will take time and dedication: You need to apply your focus and attention to paying down your debt and continue this process for some time before all your debt is paid off.
  2. Stop using your credit cards: Use cash or a debit card only to pay all your bills and expenses.
  3. Make a list of all your cards and details: Include the interest rates, the amount of debt and the minimum payments required for each.
  4. Target one high interest balance with most of your cash and pay only the minimum balances on lower interest cards: This is called the avalanche method.
  5. Update your budget and stay diligent to erase unnecessary expenses: If you keep your budget up to date and you're aggressive with sticking to your budget, you'll see big improvements in no time. The success of this plan is ultimately all about discipline.

The 'pros' of Chapter 7 bankruptcy

Each bankruptcy process has its pros and cons. In the case of Chapter 7 proceedings, there are the obvious cons, such as needing to liquidate certain assets, the stringent qualification requirements, the fact it will be a negative spot on your credit report for years and so forth. However, this article doesn't intend to focus on these negatives as the potential benefits are much more important than the cons.

Here are some of the most important positives about Chapter 7 bankruptcy that filers should be aware of:

  • Chapter 7 bankruptcy happens quickly. Most filers have completed the process within three to six months.
  • Most of your assets will be exempt from liquidation. Chapter 7 is not supposed to leave you destitute. Rather, it's supposed to give you the ability to have a sound financial life again. This means that the personal possessions you need for driving, wearing clothes having a home, etc., should remain largely immune from liquidation.
  • Within a year of filing for Chapter 7, you should be able to get new lines of credit.
  • You can file for Chapter 7 multiple times in your life, but they have to be spaced apart approximately six years.
  • Bankruptcy filers benefit from an immediate automatic stay. This prevents debt collectors from harassing you and garnishing your wages.

2 things to help you navigate your credit card debt

It's easy to find yourself in out-of-control credit-card debt. All it takes is the decision to put a fancy vacation on your card. If you come home, and then find yourself in the throes of a difficult and costly health condition, you may be tempted to charge your medical expenses on your card. Then, you'll really be in trouble.

If you're having a hard time with credit-card debt -- or if you simply own a credit card -- take a look at the following three tips. They might help you maintain a good credit standing:

An automatic stay won’t always prevent your foreclosure

One of the benefits of filing for bankruptcy is known as the automatic stay. The automatic stay puts a moratorium on your creditors in their debt collection efforts and it's a feature of both Chapter 7 and Chapter 13 bankruptcy proceedings. However, in some cases, the automatic stay won't stop your creditors from taking legal action against you. Here are a few examples of these situations:

If you had a bankruptcy case dismissed inside the last year: If your previous bankruptcy was dismissed within the last 365 days, you will have to go through a waiting period of 30 days before your new bankruptcy will activate the automatic stay.You've had two or more bankruptcy cases dismissed inside the past year: This would be the worst-case scenario in which your automatic stay won't ever activate, and you won't be able to receive this benefit.

Chapter 7 bankruptcy: You won't need to sell all of your things

If you're like most Chapter 7 bankruptcy filers, you will be concerned about exemptions. What personal assets will you need to liquidate in your bankruptcy process? What personal assets will be exempt from liquidation? Fortunately, with advanced planning and legal analysis, you can make an educated guess about which of your assets you'll be able to keep.

The following assets, for example, often benefit from exemptions:

Are you underwater in credit card debt?

There's nothing worse than feeling like you don't have enough money to pay the bills. Not only will you feel like you don't have enough money to spend on entertainment and other things you enjoy, but you'll be worried about having enough cash to put food on the table, pay for vital utilities and pay the rent for the roof over your head. When some people find themselves in this kind of situation, they may turn to their credit card for a bailout, so they can make financial ends meet.

The problem is, this can land you in hot water fast. Using your credit cards to pay your bills can quickly cause a debt problem that spirals out of control.

Which of my debts will not disappear via Chapter 7 bankruptcy?

Chapter 7 bankruptcy could allow you to wipe out a lot of debt if you can get approved for the process. However, there are certain types of debt that you probably won't ever be able to legally walk away from. What follows is the short list of debts that tend to be immune from the Chapter 7 process. If the vast majority of your debt happens to fall into one of these categories, it's highly likely that you won't be able to make it disappear:

Student loans: Education loans tend to be exempt from the bankruptcy process and it doesn't matter if they're federal loans, private loans or direct loans from the educational institute. In rare cases, people with an extreme need -- such as a permanently disabled person -- may be able to eliminate this kind of debt.

Billionaire reveals the best investment you can make

Everyone wants to take the money they earn, use it wisely and turn it into more money, right? This is exactly what the most successful billionaires in the world have done, and the average consumer can invest their money, too. Mark Cuban, the billionaire businessman, recently told MarketWatch in an interview his number one piece of investment advice: Pay off your credit cards.

He said that if there's one investment you make right now -- that will be the most profitable to you in the long run -- it's paying off your credit card debt. Cuban said that he, himself, struggled with credit card debt when he was in his 20s. He said that he eventually learned that the money he could save in credit card interest by not holding a balance on his cards was far more money he could earn by investing it.

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