It’s sad to say but there are situations when the only solution that you have to fix your finances is to file for bankruptcy.
With how the economy isn’t as uplifting and positive looking as it is, you need to be able to lay down ALL your options and determine which one would best solve your problems. In this case, the specific solution we’ll be talking about is filing for bankruptcy.
Not many people take this route but when they do, it actually helps them rid of some of their biggest problems. You just have to make sure that you know what you’re doing so filing for one becomes a solution and NOT an added problem at your end. Trust me, if you aren’t as familiar with the process and how it works, you may end up with a bigger problem.
I’ve consulted a chapter 7 bankruptcy attorney in Deerfield about a situation that I had before with my client. It was there when I realized how filing for a bankruptcy can be a double edged answer to your problems.
If you want to make sure that you get the best results from it, then here are some do’s and don’t’s that you can look into about bankruptcy:
- DO – Make an objective and realistic assessment of your situation. Consider all your debts, make note of their types, for some debts like mortgage or child support cannot be relieved by bankruptcy.
- DON’T – Skip the foreplay. As with many other more pleasant activities, the research and preparations are your safety net. If you haven’t done this before, you’ll find out that being prepared can take a lot of stress off your shoulders and make you better at it.
- DO – After you have done your homework thoroughly, consider the advantages and drawbacks of a bankruptcy situation. If there is anything you can do to avoid it, try that solution first. Consider options like financial coaching, credit counseling, loan refinancing or modification or credit card consolidation to stop the financial bleeding.
- DON’T – Let the creditor pressure get to you and most certainly DON’T make rushed decisions. Worse case scenario: filing bankruptcy will result in an “automatic stay” which will prevent creditors from attempting to collect any of your money or seize your assets.
- DO – Know when it’s time to call it quits. Okay, so you’ve battled the debts with all your might and still the windmills are turning? Go to your last resort. If you have no more savings, you are unemployed and can’t collect unemployment anymore benefits, file for bankruptcy. If you have unpaid back taxes, you are being sued for unpaid debts or your home is nearing foreclosure, file for bankruptcy.
- DON’T – Be a smart-ass and think you can get through this on your own. You need professional help.
- DO – Hire a lawyer before filling. Attorney agencies with experience in the field are your best bet. They will help you evaluate your situation and direct towards the best course of action. Even if you have strayed from this list and skipped the homework part, this will save you a lot of trouble and put you one step ahead.
- DON’T – Overplay your hand…or budget. Do not go for the legal hotshots, the great movers and shakers of the attorney business. Being represented by a big firm isn’t necessarily a good thing. Go for the smaller, local companies, they will be adapt previous experiences to your situation and are more likely to completely personalize their services to you and your needs.
- DO – Understand the difference between Chapter 7 and Chapter 13 and which one suits you best. If you don’t know what I’m talking about then you should go back to the first three points on this list.
- DON’T – Forget to prepare for the “meeting of creditors”. Once the filling process is complete, you will be summoned to a hearing where you will be asked a few questions about your bankruptcy petition and you will declare that you understand and agree to filing for bankruptcy. The creditors are allowed to attend and ask questions, so be prepared.
- DO – Use the almost-stress-free period you get after the meeting for yourself. Find peaceful moments and try to get over the emotional hump that this process creates. Go see a shrink and if you’re embarrassed, don’t tell anyone. You need to put yourself back together mentally if you want to get back on the financial horse. Hopefully it will be a pony ride this time, not a rodeo.
- DON’T – Let creditors keep contacting you regarding your debt. The “automatic stay” that goes into effect is enforced by the law. Refer all your creditors to the lawyers office and know that any violation of the stay can result in damages against the creditor. Don’t let them keep nagging you.
- DO – Get ready for a challenged decision of discharged debt. There are many cases in which the creditors file a lawsuit to challenge the discharge of your whole debt or a particular one. If the 60 day deadline passes and no lawsuits are filed, depending on the chapter you filed, you will receive notification of the discharged debt, or notice that your payment plan has been followed and completed. Again, if you don’t know what I’m talking about, go back to the top of the list.
- DON’T – Be afraid to ask questions and always keep an eye out for useful information.
After going through the “Do’s and Don’ts” above, you now should have a better idea about bankruptcy.
With everything that we’ve discussed, you should be able to determine if filing a bankruptcy for you or if you need to look for better solutions.
I hope you don’t ever have to file for one but if you do, then please review what we’ve discussed first and make an educated decision base don that. If you ever have any questions or tips that you’d like to share, be sure to comment below! I hope to hear form you soon.
Photo Credit: Flickr/Chris Potter