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If you find yourself overwhelmed by debt, then filing for bankruptcy may be the last resort. However, filing for bankruptcy is not the only solution to your financial predicament. Before you decide to file for bankruptcy, it’s imperative to evaluate the consequences carefully and whether you have other alternatives.
You should know that filing for bankruptcy will go into your credit report, visible by investors and lenders. Bankruptcy records are public and are accessible to any interested party. Thus, you should make sure that you are making the right move and providing a solution to your crisis. Here are a few pointers to help you decide whether filing for bankruptcy will prove beneficial.
Check for Alternatives
You may not be in a bad financial situation as you think. Bankruptcy will harm your credit score and impact your borrowing capability. Determine whether you have other means of clearing your debt and how far you are behind your payments.
You may try negotiating with your lender to determine whether you can adjust your repayment options. It may be convenient for both parties if you work out a settlement formula and reach an agreement. If your lender doesn’t budge, then filing for bankruptcy may be your only option.
Your negotiations with the lender may fall apart, and thus, you may consider a credit counselor. The counselor will know how to approach your lender and work to have your interest rates reduced. Before filing for bankruptcy, consider a credit counselor as an alternative and work out a solution.
You may also require the services of a bankruptcy attorney to help you navigate through the whole process. Filing for bankruptcy may be a bit daunting given the procedures and documentation involved, which is why you may need a lawyer.
Be Knowledgeable About Bankruptcy
It’s imperative to familiarize yourself with bankruptcy and the involved terms before filing. There are two types of bankruptcy that you may consider. Chapter 7 bankruptcy is where most of your debts are canceled in a process that may take about three to six months. Chapter 13 bankruptcy is where you can use your income to settle your debts over a duration of time.
Check for Eligibility
Ensure that you are qualified to file for bankruptcy. You may fail to qualify for bankruptcy if you have enough income to settle your debts. Also, your debt margin and income level will determine whether you are eligible to file for bankruptcy.
Evaluate and weigh your options before filing for bankruptcy. Talk to the right professionals who may guide you and provide a long-term solution to your debt problem. Learn more about bankruptcy and the types of debts that can be canceled.
Emma Sturgis is a freelance writer based out of Boston, MA. She writes most often on health and education. When not writing, she enjoys reading and watching film noir. Say hi on Twitter @EmmaSturgis2
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