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Is Filing for Bankruptcy Really a Good Idea?

If your debts are ruining your life, it may be time to consider filing for bankruptcy. However, this course of action should be your last option, after you have looked at each of the ways you can solve your debt problems. Below are some of questions you should answer before filing for bankruptcy in the United States.

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What Alternatives Do You Have?

There are alternatives to bankruptcy. However, these alternatives also have their disadvantages, so you should be aware of this. You could start by engaging and trying to negotiate with your creditors. They may be willing to spread out your repayments or reduce the amount of money you owe to them. If you are not confident about dealing with this yourself, you can ask for help from a local Credit Counseling Agency.

Doing nothing can actually be an advantage too and reduces the stress people experience when their debts get out of control. If you don’t have the means to pay off debts now or in the future, you become ‘Judgement proof’, which means creditors cannot pursue you for money don’t have. However, taking no action at all limits the amount of money you can earn and the lifestyle you lead for many years to come.

How Will Bankruptcy Affect Your Personal Life?

When you agree to go through the bankruptcy process, it can be stressful and extremely intrusive. In order to complete the process, legal experts have to trawl through all of your financial dealings and you have to be prepared to accept this invasion of privacy.

Will Other People Be Affected?

You may not be the only one who is affected when you become bankrupt. Partners and family members will also experience some of the stresses and difficulties this situation can produce. In more serious instances, other people such as family members and friends who co-signed loans may be drawn into this process too.

What Debts Will Be Paid?

Different types of bankruptcy options have different outcomes. Some people have all of their debts wiped out, while other individuals may still have to pay certain debts that are not covered by a particular type of bankruptcy option.

What Do You Lose?

To clear the slate, many people who become bankrupt have to surrender property or certain possessions. You should fully understand what you could lose and what possessions you can keep, before signing any bankruptcy documents. It may be more expensive than you first expected.

How Will You Access Funds and Credit?

A person who becomes bankrupt will find it extremely difficult and expensive to get any credit for a few years. This is something you should seriously consider as part of your decision making process. If you can access funds in other ways in the future, it may not be as much of a problem.

Each person’s financial situation is different and this has to be taken into account before you file for bankruptcy. A bankruptcy attorney approaches each individual case differently and provides advice and a tailored solution for that person, if they eventually decide filing for bankruptcy is their only option.

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