Many people right now are thinking about filing for bankruptcy because the state of the economy has left them without a leg to stand on. The past couple of decades have seen huge booms in credit, and people have been living beyond their means for years at a time. If you’ve found yourself in this boat and feel like you don’t have a chance of going anywhere, you may be rolling that b word around in your mind each day. Before you start on the paperwork, though, think about a few things to see if you really do need to file for bankruptcy.
One thing to remember is that bankruptcy isn’t a quick and easy solution. It will affect the next several years of your life because it will be a huge hit on your credit score. If you file for bankruptcy, you may not be able to get a mortgage or a car loan for quite a while, so you need to make sure that you have a new situation to walk into after you file. Do you have a home you can go to, or will you have to uproot your family without somewhere to go? Think about these things because the end result of bankruptcy could be several years of financial uncertainty.
Remember, too, that bankruptcy won’t make all of your problems disappear. Student loans, for instance, won’t be dismissed when you file bankruptcy. While most consumers are struggling more with credit card debt that student loan debt, you may still feel like you’re drowning in a pile of loans from your education. Make sure you know what will and will not go away before you file for bankruptcy.
Keep in mind that most of the time, your financial situation can be fixed to some degree. You can often get credit card companies off your back by offering a lump sum payment. They’ll often take pennies on the dollar for credit card debt because if you actually file for bankruptcy, they won’t get any money at all. Sometimes all you need to do is buckle down, get a budget, and work on fixing your own credit step by step in order to avoid this dramatic and often unnecessary step. It’s tough to feel that you’re drowning in debt, but if you hang in there and use a little common sense, you’ll be able to get the better of these tough times.