It doesn't take much to knock your financial foundation right out from under you. The loss of a job, a sudden illness, or even a divorce, can all send your finances into a tailspin. If you're facing debt that you can't get out from under, it's time to give bankruptcy some serious consideration. It may be your best option for getting out of debt. Here are three tips that will help you through the process of filing for bankruptcy.
Try to Renegotiate the Debt
If your current financial struggles are related to your inability to make your normal payments, it's in your best interest to try and renegotiate your debt. Many creditors will work with you to restructure your payments to make them more affordable for you. The benefit of this is that you can continue meeting your financial obligations, and avoid bankruptcy court. It's important to note that if you are able to restructure your payments, you'll need to continue meeting those obligations or you could end up right back in the same position.
Have a Firm Foundation Before You File
There are times when financial problems arise due to overspending, as opposed to specific crises. If your debt is a result of overspending – specifically credit card spending – it's important that you get those issues under control before you file for bankruptcy. Filing for bankruptcy when you have a problem with overspending will only provide you with momentary relief; this is particularly true if you continue overspending once your bankruptcy has been discharged. To avoid a repeat of the financial problems, be sure you're on a firm foundation before you file for bankruptcy. One way to do that is to sign up for budgeting classes before you file.
Know What Your Bankruptcy Options Are
If you're going to be filing for bankruptcy, it's important that you know what your options are. There are actually two different types of bankruptcies that individuals can file for; chapter 13 and chapter 7. Chapter 13 is designed to reorganize your debt. Through this, you'll be required to make payments for a specific period of time. After that, the remaining debt will be discharged. Chapter 7 is designed to liquidate your debt, which means all your qualifying debt will be discharged. It's important to note that there are income eligibility requirements that you must meet before you can file for chapter 7 bankruptcy.
Don't let the confusion surrounding bankruptcy filing keep you from getting the relief you need. Talk to a bankruptcy attorney or a chapter 7 bankruptcy filing service about the options you have available to you.