Filing For Bankruptcy

Filing for bankruptcy can be a very scary thing. There are a lot of things to think about and you should really consider the consequences of what filing for bankruptcy will mean for you before you do it. A bankruptcy lawyer will guide you through the process, but they want to to file because that is how they make money. Here are some things to consider before you file for bankruptcy.

First, how much money do you make each year compared to the size of your debts? If your debts are less than half of what you make in a year, then you should not file for bankruptcy. Sure you might have to cut back on some of the extras and it might take you 3 or 4 years to get completely out of debt, but you will have much better credit and you will not have to suffer the effects of a bankruptcy that will be on your credit for 7 years.

Second, do you own your home and do you have any equity? If you own your home and have some equity, then you have leverage to refinance and pay your debts off. If you file for bankruptcy the court is going to make you use your equity to pay off creditors anyway so you might as well use it for yourself before you are forced to. Plus you can get your mortgage company to settle some of your debts for less than you owe to help you out.

Last, do you own your cars outright? If you own the title to your car or cars, then you can get a title loan or sell them to help out with your debts. The bankruptcy court is going to allow your creditors to take your vehicles or place liens against them anyway so you might as well use this leverage to work in your favor before it works against you.

You should consult a financial advisor before ever considering such a decision like filing for bankruptcy. This is a large and life altering decision and, yes, you should get out of debt, but bankruptcy is not always the answer.