When you’re in a debt spiral, the only recourse you have to build financial well-being is bankruptcy. However, before you make the decision to file bankruptcy, you should ask yourself these few questions and determine your final status. Following these tips will help you avoid bankruptcy.
Can you avoid filing for bankruptcy by cutting extravagant spending, cutting back on your lifestyle, liquidating your assets, getting another job, negotiating with creditors to lower your interest payments, or setting up a debt consolidation program?
Do you have the ability to accept the immediate consequences of bankruptcy, such as severely ruined credit, higher interest rates on new loans and credit cards, difficulty renting an apartment, getting a new car, credit card, etc.?
Will you be happy being poor? Doing nothing about your debts is an option, only if you feel you can survive penniless. If you have property, your creditors can take it away, and judgments against you can last ten years.
It is essential to remember that bankruptcy is not demeaning or humiliating. You don’t have to be bankrupt from extravagant spending; There may be Trans Union circumstances. Make sure the reports say that your debts have been discharged in bankruptcy. beyond your control, such as accidents, death, medical bills, job loss, etc. that can leave you in that condition. Most people find that they have no choice but to file for bankruptcy.
Bankruptcy is the best option when you know it may take more than five years to pay off your unsecured debts. Bankruptcy will not take care of secured debts, mortgages, car loans, student loans, alimony, child support, etc.
However, if you have filed for bankruptcy, it is important to take the following steps:
Hire a good, reputable attorney. Make sure you have all the necessary documents, including a list of creditors to give to the lawyers.
Be sure to get credit counseling from an approved agency within 180 days of filing.
Cancel all your credit cards so you don’t get a bill. It will be considered fraudulent to use your credit cards after filing bankruptcy.
Do not deposit your money with the banks that issued your credit cards. Banks are entitled to another sixteen funds on deposit if a credit card account becomes delinquent.
Tips for handling bankruptcy
After filing bankruptcy, take the following steps: Start building your credit score by obtaining a secured credit card or passport loan. Do not exceed your available credit and pay your balance in full. After one year, apply for a regular credit card.
Order your credit reports from the three major credit bureaus: Experian, Equifax,
Get an installment loan as a way to rebuild credit. However, this can imply a very high interest rate.
If you have student loans, try to pay more than the minimum required each month.
Never co-sign on a loan.
If you intend to keep your car, sign a reaffirmation agreement with your lender.
Manage your finances wisely.