Make no mistake about it, filing for bankruptcy is an extreme move, not a quick fix. It’s a long, painful process with a huge stigma, and you’re unlikely to be able to get any kind of credit for ten years afterwards. Yet bankruptcies are on the rise. More and more people seem to be using bankruptcy as a first option, instead of a last resort. Make sure you’ve considered every alternative, exhausted every possible option, before you resort to bankruptcy.
First ask yourself, “have you reorganized your debt”? If you haven’t tried debt consolidation or negotiation, you really should. You’ll have to pay back your debts eventually, but it’s definitely better than bankruptcy. There are various ways to eliminate debt quickly and cost effectively including settlement. These debt reducing techniques are less damaging to your credit rating than bankruptcy as well.
Sell everything you can. It’s better to sell everything you own than it is to go into bankruptcy. Move to a smaller house. Sell your cars and take the bus. Take a good, hard look at your life, and realize that there are very few true basic necessities. You can do without a lot more than you probably realize. Your house is probably full of quite valuable things that you never use, so bite the bullet and get rid of them. You are going to lose almost everything you own if you declare bankruptcy, so you might as well try to sell it yourself at a better price and avoid the bankruptcy issue altogether.
Try subtracting your debt payments from your income, and live like someone who earns what’s left over.
Work more. If you can get extra hours, do it. Being bankrupt is such an indignity that you should at least try going to your boss and asking for a pay rise or promotion. After all, the worst they can do is say no. They’re going to find out about it anyway if you declare bankruptcy, and they might wonder why you didn’t come and ask for their help. If you’re married and only one of you works, get the other a job.
Use threats. One of the best things to do when you’re considering bankruptcy is to write a letter to absolutely everyone you owe money to, letting them know. Make it very clear: “if I cannot find a way of paying my debts then I will be forced to file for bankruptcy”. Most creditors would rather let you pay back a tiny fraction of what you owe than have to try to get money out of a bankrupt.
Understand your state’s laws. Bankruptcy laws vary enormously depending on where you are. There are some places where you’ll be forced to give up everything you own to pay your creditors, some states where you at least get to keep your house, and some where you can declare yourself bankrupt and not even notice! Get a lawyer – you might think that you can’t afford one, but you might realize you can’t afford not to have one.
Tags: bankruptcy, credit, creditors, debt consolidation, debt settlement, income
Leave a Reply