Filing for bankruptcy is a major decision. It damages your credit and seriously impedes your chances of getting a loan. Yet, it might be your best option. If you’ve gone through all of your debt-relief options and still feel as though you’re buried, there’s not much that you can do.
Ultimately, bankruptcy is your chance to start over. It’s your second chance. The path won’t be easy but if you’re smart you can create a strong financial future for yourself.
Reasons to File
It might be easier to keep your head in the sand, but it’d healthier to face your problems. One of the most common reasons to file for bankruptcy is medical debt. When it comes to your health, you can’t pull punches. It doesn’t matter if you have great insurance or if you’re uninsured, you have to get medical treatment.
Unfortunately, health problems can interfere with your ability to work. This makes it even harder to keep up with your bills. If you’re lucky, your boss will be understanding and you’ll be able to hold on to your position.
If you’re not, you’ll lose your job.
There are other reasons why you might not be able to repay your debts. These include your home is being foreclosed, you’re living entirely on credit, and you’re being sued by your creditors.
You should carefully review your situation before you decide to file bankruptcy, even if you’re sure it’s what you want to do. You want to make sure that all other options are exhausted before you commit to this step.
Okay. You’re in a rough financial position. Do you have any options besides bankruptcy? It depends on the state of your case and how dire things have truly become. However, it’s worth it to at least consider if there’s something else you can do.
You can try tightening your budget. No more trips to the movie theater, no more coffee during your morning commute. Cut your spending to the absolute minimum. You might have to make more serious financial adjustments as well, like downsizing your home and selling your car.
If slashing your budget isn’t enough to do the trick, you can try picking up extra work. Getting a second or third job isn’t fun but it could get you out of your difficulties. A solution is to become a rideshare driver. Then you don’t have to worry about scheduling conflicts.
A strategy that could work for you is to negotiate with your creditors. They’ll often accept a payment plan. Just make sure that you don’t agree to something you can’t stick to. Otherwise, you’ll end up in the exact same spot.
Be wary of credit counselors that promise amazing things. A good one acts as an advocate on your behalf in dealings with your creditors. A bad one charges you a lot of money and doesn’t do anything at all.
Do You Qualify?
Everyone can’t file bankruptcy. You have to meet certain standards. There are two types of bankruptcy, Chapter 7 and Chapter 13. They each have their own specific rules.
You can file for Chapter 7 bankruptcy if you can’t afford to pay your bills. You’re completely swamped by your living expenses and have no way to repay your debts.
You also have to earn less than a set amount. The court will determine if your position is as dire as you claim.
Chapter 13 bankruptcy is for people who have a job and are earning income. They must have less than $394,725 of unsecured debts and less than $1,184,200 of secured debt.
Contact an Attorney
If you seriously think that bankruptcy is your best option, it’s a good idea to contact an attorney. He or she can explain your options and help you achieve your goal. An attorney might be able to help you discharge your debt as well.
Going through a financial upheaval is incredibly difficult. It can mess with your stress level as you’re eaten up with worries about money. However, bankruptcy isn’t the end of the world. You can completely recover.
In order for that to happen, you need to be smart with your finances. You’ll have to submit to a strict financial plan. It won’t be a lot of fun but it will slowly improve your credit.
You can speak with a professional to determine if filing for bankruptcy is the right choice for you. If it is, it’s better to get started as soon as possible.