Filing for bankruptcy is a difficult process. It can be a great way to get a fresh new start, but it is also very hard. Your finances will hurt for the next couple years, not to mention your credit will be non-existent. Thus, if you are thinking about bankruptcy, it is important to educate yourself about the options as much as possible. Here are some things that you need to know about bankruptcy.
You Will Have To File and Be Approved For Bankruptcy
You cannot simply decide that you want to declare bankruptcy. Instead, you have to go through a process. This process involves having a professional looking at your finances and then appearing before a judge. The judge will then look at everything and decide if you are approved for bankruptcy. Only after you have filed with a lawyer and been approved can you declare bankruptcy.
Your Credit Will Be Ruined For Years Afterward
One of the biggest advantages from filing bankruptcy is relief from your creditors. One of the biggest disadvantages is that it will ruin your credit for years to come. Depending on the type of bankruptcy you file you could have ruined credit for up to a decade. This is because once you default on your loans you become untrustworthy for credit. Thus, you will have a hard time getting approved for a loan. If you do choose to buy on credit, you will most likely have a higher interest rate. Then after the bankruptcy has been removed from your record, usually about 7-10 years, you will be able to start building your credit again.
What If You Don't Get Approved For Bankruptcy?
If you don't get approved for bankruptcy there is still hope. There are a couple things you can do. First, you can negotiate debt with a lawyer present. Usually if you let your creditors know that you might default on their loan, they will be incentivized to help you so they can at least get something. They might forgive interest, allow you to make payments, or even forgive a portion of the loan if you just pay some.
Second, you can start liquidating. Sell what you do have to start paying for debt. Bankruptcy might liquidate your assets anyway. Thus, you could do this on your own to help pay for your debt.
If you have more questions about bankruptcy, talk to an attorney like Thrush Douglas L Attorney at Law or a financial advisor today.
Share5 March 2015
Filing for bankruptcy has a tendency to make people feel ashamed and stressed out, and can turn into a big source of depression if not handled properly. As a counselor for couples and families, I have worked with various families throughout the years who have had to go through bankruptcy. And during this time, I have seen firsthand how, with the right mindset, going through bankruptcy can make people stronger in their financial lives and careers. I started this blog to provide information about the right things to do and the things that should be avoided while going through bankruptcy to minimize stress and maximize potential once the process is over. If you have any questions or concerns, hopefully they can be addressed on these pages.