When immersed and spiralling in debt, one's only resort to building financial well - being is bankruptcy. However, before making a decision to file for bankruptcy, you need to ask yourself these few questions and determine your final state. Following these tips will help you to avoid bankruptcy.
Are you able to avoid claiming bankruptcy by cutting extravagant expenses, trimming your lifestyle, liquidating your assets, getting another job, negotiating with creditors to reduce your interest on payments or setting up a debt-consolidation program?
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Do you have the capability to accept the immediate consequences of bankruptcy such as badly ruined credit, higher interest rates on new loans and credit cards, difficulty in renting an apartment, getting a new car, credit card etc.?
Will you be happy being a pauper? Doing nothing about your debts is an option, only of you feel you can survive being penniless. If you have assets, your creditors can take them away and judgments against you can last for ten years.
It is essential to remember that bankruptcy is not debasing and cause for humiliation. It is not necessary that you are bankrupt because of extravagant spending; there maybe circumstances Trans Union. Make sure the reports say your debts have been discharged in bankruptcy. beyond your control like accident, death, medical bills, job loss etc. that may render you in that condition. Most people find that they have no recourse but to file for bankruptcy.
Bankruptcy is the best option when you know that you 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, then it is important to take the following steps:
Hire a good and reputable attorney. Ensure that you have all your necessary documents including a list of creditors to give to the lawyers.
Ensure that you get credit counselling from an approved agency within 180 days of filing.
Cancel all your credit cards so that you do not run a bill on any. It will be considered fraudulent to use your credit cards after filing for bankruptcy.
Don't deposit your money with the banks that issued your credit cards. Banks have the right to seize other funds on deposit if a credit card account becomes delinquent.
Tips for handling bankruptcy
After you have filed for bankruptcy, take the following measures: Start building your credit score by getting a secured credit card or passport loan. Do not exceed your available credit and pay your balance in full. After a year, apply for a regular credit card.
Order your credit reports from the three main credit bureaus - Experian, Equifax,
Obtain an installment loan as a way of rebuilding credit. However, this may involve a very high interest rate.
If you have student loans, try to pay more than the minimum required each month.
Never co-sign for a loan.
If you intend to keep your car, sign a reaffirmation agreement with your lender.
Manage your finances prudently.
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