Whether you have lost your job and income source or you have accumulated more debt and bills than you can afford, filing bankruptcy may be the best option for financial relief. Unfortunately, many people choose NOT to take bankruptcy seriously. Without proper understanding, budgeting, and learning from your past mistakes, bankruptcy will not be a good move for your financial future. If you are considering filing bankruptcy, here are a few questions to ask yourself first.
Are There Other Options?
Filing bankruptcy is a serious decision that can affect not only your future finances, but also your credit score for a period of time. As a matter of fact, a bankruptcy can stay on your credit report for up to 10 years depending on the specific type you file. Because of the severity, it is important to consider ALL options before filing.
If you have been out of work for an extended period of time, catching up on your normal bills will be challenging. In addition, paying down your debt when you have no income coming in can be impossible.
Thankfully, help is available.
Today, more and more creditors are choosing to work with consumers, lowering interest rates for a period of time or negotiating a smaller payoff. If you have been late or have missed payments, do not avoid the creditors. Instead, have a conversation with them about why you are unable to pay and see if there are programs that they offer.
Another option to regain control of your finances is to search for part-time or freelance work. Even a small amount of money can add up to make a big dent in your debt.
Finally, consult a bankruptcy specialist about credit counseling and debt management courses. These classes are not only for individuals filing bankruptcy. They are helpful for anyone who needs help learning how to budget to pay down their debts efficiently.
Are You Willing to Change?
Another question you need to ask yourself if you are considering bankruptcy is if you are ready to change. While some people need to file bankruptcy because they have lost a large source of income, others file bankruptcy to right their bad decisions. No matter which type of person you are, you need to be willing to make some changes after filing bankruptcy.
Living within your means is one of the most difficult changes for many people to make when they file bankruptcy. If you are filing Chapter 13 where you will be paying back your debt over a period of time, living within your means will be even more important.
Each payment you make to your bankruptcy trustee will be divided up and sent to all your creditors. The payment must be made on time and for the designated amount or the bankruptcy courts will step in and begin legal action.
If you are filing Chapter 7, which is basically a discharge of your debts, you may think you do not have to worry about finances any more because you will no longer have these debts to pay. Unfortunately, thinking this way could cause you to overspend, which may lead to more debt after the bankruptcy has already been filed.
Once you file, you need to learn how to live within your means. Do not make expensive purchases, such as jewelry, new cars, collectibles, or vacation packages, since you should be concentrating on paying down your debt, catching up on your other bills, and saving money.
To ensure bankruptcy is right for your needs and your financial future, proper understanding is crucial. By asking yourself these questions, you will understand the severity and benefits of filing bankruptcy.
For more information, get in touch with a bankruptcy lawyer.