Filing for bankruptcy can seem like the only option when you're struggling with debt, but it's essential to explore all of your options before making a decision.
There are several personal finance tips that you can try before resorting to bankruptcy. This blog post will discuss the best tips to help get your finances back on track.
What Is Bankruptcy?
Bankruptcy is a legal process that allows people or businesses to restructure or eliminate their debt. There are two common types of bankruptcies:
Bankruptcy can be filed by individuals, married couples, corporations, and partnerships. Filing for bankruptcy protection gives the debtor a fresh start by discharging most debts. Bankruptcy should be considered a last resort after you have tried all other options to repay your debt.
Filing Bankruptcy? Try These Tips First
1. Don't OverSpend Or Clear Out Your Retirement Account
Being in debt doesn't mean you should go on a spending spree or start draining your retirement account. This will only leave you in a worse financial position later on. Instead, try to stick to a budget and make wise spending choices.
If you're struggling to make ends meet, it may be time to consider filing for bankruptcy. This is the last resort option and should only be considered after you've tried all other options. If you're considering this, speak with a bankruptcy attorney to learn more about the process and what it will mean for your future.
2. Consider Other Alternatives Before Filing For Bankruptcy
If you're struggling with debt, you may be considering bankruptcy as an option. However, before you decide to file for bankruptcy, there are a few other personal finance options you should try first.
Consolidation means taking out one loan to pay off several others. This can be a good option if you struggle to make multiple monthly payments. Negotiating with creditors involves talking to your creditors and trying to work out a payment plan that works for both of you.
Bankruptcy should be considered a last resort. If you've tried other options and nothing has worked, bankruptcy may be your best option. However, speaking with a financial advisor or bankruptcy lawyer is essential before making any decisions.
3. Bankruptcy Won't Eliminate All Your Debts
Government debts, like taxes, student loans, child support, and alimony payments, cannot be eliminated through bankruptcy. You'll still be required to pay these debts after filing for bankruptcy.
If the debt is unsecured or secured by property that you want to keep and the payments are too high for you to make, you may be able to negotiate with the creditor to lower the payments or interest rate. Before you file for bankruptcy, talk to a qualified personal finance or credit counseling professional to get more information about your options.
4. Bankruptcy Is Expensive And Complicated
Bankruptcy is a little bit expensive. The filing fee for a Chapter bankruptcy is $335. You will also need to pay for Pre-Bankruptcy Credit Counseling and Pre-Discharge Debtor Education from an approved provider. These two classes cost $50 -$100 each.
If you can't afford to pay for these courses, guaranteed payday loans no matter what Australia, can be availed easily from online loan matching services. These loans are easily accessible and help you escape your financial mess. But, be sure to repay the loan on time to avoid further debt.
Additionally, you will need to pay your attorney's fees and any other miscellaneous costs associated with your case. These can range from a few hundred to a few thousand dollars, depending on the complexity of your case. Although you may be required to pay some money upfront, most bankruptcy attorneys will allow you to make payments after filing your case.
5. Filing Bankruptcy May Affect Your Credit For Years
filing for bankruptcy may affect your credit for years to come. If you're considering this option, try some other personal finance tips first. There are several options to consider that may help you get back on track without having to file for bankruptcy. These include:
- Working with a credit counselor to negotiate with your creditors
- Setting up a debt management plan
- Making a consumer proposal
- Exploring other options such as consolidation loans or consumer credit counseling
If you're struggling with debt, speak with a professional before making any decisions. They can help you explore your options and find the best solution for your unique situation.
Filing for bankruptcy should be everyone's last option. Talk to professionals before deciding. If all else fails, bankruptcy might be your only way out. Be sure to talk to a professional about your situation before deciding.