When dealing with the stress of financial hardship it’s easy to put off discussing the possibility of bankruptcy. However the process is designed to provide protection to you as a debtor: it keeps creditors from harassing you, prevents them from suing you and helps eliminate or minimize your debts. If you thought that life ends after bankruptcy, think again, in reality it offers you a fresh start.
If you are unsure if bankruptcy is the right choice, follow these steps to ensure you are making the best financial decision:
Get a clear picture of your finances
While this may sound obvious, it is extremely important to get a clear perspective of your financial situation. Begin by gathering information on your income, monthly expenses and debts. With these specific numbers on hand, you can determine if you actually have enough disposable income to pay off your debts. Also, when analyzing your financial standing, you should ask yourself questions such as, “Do I only pay the minimum on my credit card?”, “Are debt collectors calling me?”, “Do I pay for necessities with credit cards?” and “Am I unsure how much I actually owe?” Closely inspecting your finances and asking yourself difficult questions will give you a better understanding of your situation. The sooner you do this, the quicker you can start working toward a solution to your financial problems.
“Bankruptcy protects you as a debtor.”
Seek alternative solutions
After getting an accurate picture of your financial situation, you can determine if there are alternatives to bankruptcy, such as:
- Creating a realistic budget to eliminate overspending: Depending on your situation, you may be able to free up some extra money every month that you can use to pay off debts.
- Negotiating with creditors: Sometimes you can negotiate for lower payments. This isn’t always the case, but the conversation is worth having with your creditors.
- Consolidating multiple debts: Lumping your debts together may help lower the interest rate and consequently lower monthly payments.
While these alternative solutions may not apply to everyone in every situation, you may find they are just what you need to ease your debt load.
Evaluate if bankruptcy provides the right debt relief
After exploring alternative solutions, it’s time to find out if bankruptcy will provide you with the right kind of debt relief. Begin by doing some simple homework:
- Find out if your debts are dischargeable, which means you would no longer be obligated to pay them back.
- Investigate the pros and cons of filing Chapter 7 versus Chapter 13 bankruptcy.
- Get a basic understanding of the bankruptcy process and how long will it take. You should know this information before beginning, even if you think bankruptcy is the right course of action for you.
Contact an attorney
If you think bankruptcy is an option, then it’s time to seek out professional advice and contact an attorney. Most will provide a free consultation to look at your finances. Be sure to bring all your financial information as it will inform the attorney on what legal options are available to you. Feel free to talk with as many attorneys as you need until you find one you are comfortable with.
Don’t wait to determine if bankruptcy will provide the debt relief you need. Start evaluating your finances and consider all of the options on the table. After analyzing your situation and speaking with an attorney, you may find bankruptcy is the right choice for putting you on the path to a new beginning.