When disaster strikes and you suddenly find yourself unable to meet your financial obligations, there may be ways to alleviate some of the pain. Of course, they won’t be painless in themselves, but they might just be a better decision than choosing to trudge onward with your current obligations. Bankruptcy is one of those ways.
Bankruptcy is a way for people who can’t meet their obligations to start to dig themselves out of the circumstances they find themselves in. It’s not a beneficial move in itself, and it certainly won’t feel good, but plenty of people find it to be their next best option.
So, how do you go about filing bankruptcy? When should you do it? In this article, we’ll talk all about how you should approach bankruptcy- a difficult topic indeed.
When to File
If you’re considering bankruptcy, but don’t know if your circumstances are dire enough to file, consider just a few recommendations.
Those considering bankruptcy should be unable to mee their financial obligations. When you can’t meet your debt, you may start to fall behind. This could put you in a hole you might not be able to find a way out of.
Some of these debts might be unsecured debts, which may mean that your home is in danger. Bankruptcy may help you maintain the equity you have placed in your home.
Bankruptcy is for times when finances go into a tailspin. If you see any semblance of a way out, it might not be so good to go the bankruptcy route. Keep in mind- many times average people’s judgements aren’t so finely tuned for financial matters. You should consult a professional if your circumstances are in such dire straits.
Possible Penalties
Unfortunately, the penalties for bankruptcy are significant, and should be considered closely before any commitment is made. Bankruptcy is not a thing you enter into lightly.
If you declare bankruptcy, that stain with stick with you for at least a good ten years- or one eighth of the average person’s entire life! The information on your bankruptcy will go to credit bureaus and will be taken into account for future dealings.
Not only will your bankruptcy reflect in your credit score when you attempt to pick up new debt, but you will also not be able to file bankruptcy for another 8 years. This means that whatever deals you make, you’re going to be stuck with.
Recovering From Bankruptcy
If you’ve had to file bankruptcy and suffer the penalties, there are ways to recover. For one, make sure you listen to any advice you receive in credit counseling sessions. These institutions are in place for a reason, and you can learn a lot about getting back on your feet.
You should also get your financial life in line. It’s a hard pill to swallow, but going credit-free and establishing money management strategies will put you far ahead of the game and could even put you on the path to as much of a financial recovery as you can make.