Important Things to Know about Bankruptcy

Filing for bankruptcy is an important decision. It is not one that should be made quickly or without first looking at all the possible options available to you for debt relief. There are both positive and negative aspects to filing for bankruptcy and you should try to learn all you can about the process and how it will affect you and your financial situation, both in the short-term and beyond.

One of the first steps to take is actually determining if you should file for bankruptcy. This involves honestly looking at all of your outstanding debt, including mortgage payments, regular monthly bills, credit cards, all types of loans (personal, auto) and comparing it to your annual income. The critical factor is the ratio of debt to income. Your total debt may be small compared to someone making four times your annual salary. It’s all about percentages. Before you decide, see if bankruptcy is the right choice.

Make sure bankruptcy is the right choice. To learn more about deciding if bankruptcy is the right choice for you, click here.

If you are experiencing financial difficulties, you already know the harm it can cause to your health. Sleeplessness, worry and stress can take a severe toll on you, both personally and professionally. If you are receiving calls from bill collectors, past due notices in the mail, threats of garnishment of your wages, or are facing foreclosure or repossession of your personal property, you need to take positive action to alleviate this stress and find a way out of your financial nightmare. Licensed credit counselors are a good source of information to help people just like you. They are non-judgmental, offer sound advice, and can give you practical ideas to help get your financial house in order. Find out how credit counseling can help work for you.

There are things you can do to actively work on your financial problems. Probably the most important thing to do is not ignore them. Your bills aren’t going to go away. Sticking your head in the sand and pretending everything will be okay will only make matters worse. Remember this- your creditors want to get paid and most will be agreeable to working with you on a payment plan that you can reasonably handle. The more open and upfront you are with them, the more likely they will be to negotiate with you. Follow these important steps if you find yourself overwhelmed in debt.

You may feel like you are literally drowning in debt. Experiencing financial hardships can have a serious effect on both you and those around you. Your situation may be caused by job loss or unexpected medical expenses. The reasons behind each person’s financial problems are as different and unique as the people themselves. Bankruptcy is a serious matter and should not be entered into lightly, but it is not the end of the world. Life goes on. Slowly, you can rebuild your credit and your financial picture will begin to improve. It does take time but there are options available to you even soon after a bankruptcy is discharged. The important thing is to learn from the experience and move ahead in a sensible way regarding your money. Learn how to re-establish your credit after bankruptcy.

There are many myths surrounding bankruptcy. One is that all of your debts will be wiped clean from your credit history and you can start fresh. Well, part of that may be true. Most of your debts can be discharged if you file for a Chapter 7 bankruptcy, but there are certain debts which are never allowed to be discharged. You will still be obligated to pay them off. While you will be starting “fresh”, your bankruptcy will remain on your credit report for up to ten years. This normally means you will be paying higher interest rates on any new credit you are approved for after your bankruptcy. Most likely, you also will not have the most favorable terms in your loan agreement. The top myths are debunked.

Bankruptcy can be a viable solution to the financial hardships you are now experiencing. But it should only be considered after other, less drastic, options have been looked into and found not realistic. By learning what alternatives are available for debt relief, you can better decide if bankruptcy is the right choice for you.