Before Filing Bankruptcy – READ THIS!
Many individuals believe that filing personal bankruptcy means instant freedom from all their debts and financial woes. While it is true that Chapter 7 bankruptcy can eliminate many of your debts, not all of them can be erased.
Fill out the form below for a free bankruptcy evaluation
Before you filing personal bankruptcy, you may want to consider your other options and decide whether bankruptcy is really the right choice for you. Keep in mind that filing personal bankruptcy is often a highly emotional decision. You may feel helpless, stressed, and just want to be rid of debt. Financial decisions made from an emotional level aren’t always best.
Is Filing Personal Bankruptcy The Best Option?
There are several instances where filing personal bankruptcy may not help your financial situation.
- If you have previously filed Chapter 7 or Chapter 13 bankruptcy, you may not be allowed to file again for up to six years.
- If someone else has cosigned a loan for you, bankruptcy could be a bad option. Any debt that is discharged in the bankruptcy would still be owed by the cosigner.
- You can not use bankruptcy to discharge certain debts, like child support, spousal support, taxes, and student loans.
- Should you expect continuing debt to occur, such as hospital bills from an ongoing illness, it would be pointless to start filing personal bankruptcy.
Declaring bankruptcy can mean a huge strike against your credit score. If you currently have decent credit and can use alternate methods to eliminate your debt, bankruptcy may not be the best option for you.
Alternatives to Filing Personal Bankruptcy
If you want to avoid bankruptcy, there are several steps that can be taken. You can use these steps to save money and earn more cash that can be used to help eliminate your debt.
- Cut out unnecessary monthly bills and expenses
- Sell extra vehicles – This will not only earn extra cash toward your debts but will eliminate part of your car insurance bill every month.
- Refinance your home
- Sell your home
- Sell any unneeded valuables
- Cash out your savings account – Make sure to leave a small amount in your account for financial emergencies.
- Consolidate your debts – Try to merge all your credit cards and loans into one low interest loan.
- Renegotiate with your creditors – Your creditors are often more willing to help reduce your monthly payments than you may think. They can cut interest rates or even settle for a payoff that is up to half of what you actually owe. If you do go this route, be sure to get your agreement in writing before paying any portion of the balance.
- Contact a professional debt relief service
Beware of Debt Relief Scams
Hiring a professional debt relief company to assist you in consolidating, managing, and reducing the money you owe can be a great alternative to filing personal bankruptcy, but only if you find the right company. Many debt management companies are scams, so be sure to check any company’s ratings with the Better Business Bureau at www.bbb.org before you sign up.
Filing personal bankruptcy isn’t right for everyone. If you think your financial situation can be taken care of outside of court, consider the alternatives discussed in this article. You could be on your way to eliminating debt before you know it.
For more information on filing personal bankruptcy, consult a qualified bankruptcy attorney.
