Bankruptcy is a financial practice that allows you to
officially declare that you cannot repay your debts now and do not see how it
will ever be possible in the future. Declaring Bankruptcy is a big step. For
some people, there are other ways to get out of debt, like debt consolidation
or negotiating with your lenders. However, if your best option for getting out
of debt is bankruptcy, than you should take steps to make this financial
situation work in the best possible way for you. A financial profession can
help you do that. In any case, before you jump into anything, you need to fully
decide if bankruptcy is right for you.
First, it is important to learn as much as you can about
bankruptcy. For individuals, chapter 7 and chapter 13 are the two types of
bankruptcy that can be filed. There are other options for businesses and
entities. Learn the difference between the two so you can see how they work. If
bankruptcy is right for you, you must be aware of your obligations and your
lenders’ choices.
Once you have learned all you can about bankruptcy, take a
moment to consider other options. For example, you can consolidate your debts
into one large monthly payment. If you are considering bankruptcy because you
just barely miss paying off your bills on time every month or if you feel
overwhelmed by credit card debt, this may be a great option for you. You can
also try doing nothing and living simply for a number of years, which works
well if you have no family for which you are responsible. Another options is
negotiating with your lenders. In the end, there are many different options
other than bankruptcy, so make sure that your second step is to consider them
all.
Next, check out the requirements for eligibility for
declaring bankruptcy. If your debts are too high and your income too low, you
probably will not qualify for chapter 13 bankruptcy. On the other hand, if your
income is too high and your debts too low, you probably will not qualify for
chapter 7 bankruptcy. In some cases, you may not qualify for either, and this
is a sign that you did not think through your other choices.
Consider all of your property and debts if you do qualify.
What will happen to your home? Your car? Your retirement plan? Every state has
different specification when to comes to this, so make sure that you understand
how your property will or will not be taken. Also, it is important to begin
compiling lists of your assets and debts. Remember that some debts cannot be
wiped out, like child support payments.
Once you have all your information compiled, you can begin
the declaration process. It is best to work with a lawyer or financial
professional to complete this task, and remember to always be completely
honest. Declaring bankruptcy is not for everyone, but it can work for some
people.
