When you are in the unfortunate position of having too many months at the end of the money, most consumers start thinking in terms of bankruptcy. On the basis of common wisdom, many people assume that bankruptcy is their only alternative and that they will simply eliminate their bills so they can start anew.
This is very inaccurate, especially the "simple" part. Bankruptcy is far from simple. Yes, there are different types of "do it yourself" kits on the market that would show you how to file bankruptcy in the comfort of your kitchen table, but what they do not tell you is that you do not know how to classify correctly to keep as much of your assets as you potentially could, and that you may not even be approved to file.
Yes, you read that right. With the recent major changes to the bankruptcy law, you must now be allowed to file. It is no longer an automatic thing, as it was only a few years ago. There are now many more restrictions on when you can file a bankruptcy and even IF you can do it. One of the reasons it takes so long is that each case is evaluated individually because each person has a very unique situation.
It is interesting to note that studies have shown that the vast majority of people who file statements do NOT do so for reasons of financial mismanagement. Of course, there is inevitably, but the majority of people file it because of a radical change in their financial situation, such as a layoff, a very complicated divorce, unexpected high medical bills and various other things that can rarely be expected and planned for.
If you are thinking about bankruptcy, save yourself and take stock of your current situation. Bankruptcy may be your best option, but it is not always your best option and is certainly not your only alternative. Be aware that bankruptcy involves long-term negative aspects that should be avoided as much as possible, as the fact that a bankruptcy will be a huge red flag on your credit report for the next 7 to 10 years.
Get copies of your credit report and find out what the credit reporting agencies think of you. Studies have shown that the majority of consumer credit reports contain errors that will never be corrected unless you take the time and effort to report the error to the agencies. This step in itself could increase your credit score and make you eligible for much higher interest rates on loans and refinancing options.
You may want to consider debt consolidation. This is where you entrust your bills to a debt consolidation agency that will negotiate with your creditors to waive late fees and lower your interest rates. For example, if you paid $ 3,000 a month before, you will find that you only pay $ 1,500 a month with the help of a debt consolidation company. Know that this is not a loan, so you must track your payments to the agency.
Meet a good bankruptcy lawyer to discuss your situation. If you file for bankruptcy, you are likely to save much more than the lawyer's fees, in terms of the overall result. These are people who understand the law and can recommend the best course of action to suit your financial situation.
Do not be in a hurry to go bankrupt. You will be much more ahead to consider in detail all your options and alternatives, especially for something like a bankruptcy that will stay with you for many years to come.