Bankruptcy is a financial practice that usually allows you to officially declare that you cannot repay your debts now and do not see how it will ever be possible in the coming future. Declaring Bankruptcy is also usually a very big step. For many people, there are other ways for you to get out of debt, such as debt consolidation or negotiating with your lenders. Nevertheless, if your best option for getting out of debt is bankruptcy, than you should take steps in order to make this financial situation work in the best possible way for you. A financial profession can assist you in doing that. In any case, before you decide to jump into anything, you will need to fully decide if bankruptcy is right for you.
Firstly, it is always very important to learn as much as you can about bankruptcy. For individuals, chapter 7 and chapter 13 are the two types of bankruptcy that can be filed. There are many other options for businesses and entities. You can learn the difference between the two so that you can see how they work. If bankruptcy is right for you, you must be aware of your obligations and all of your lenders’ choices.
Once you have learned all that you can about bankruptcy, you should try to take a moment in order to consider other options. For instance, you will be able to consolidate your debts into one large monthly payment. If you are considering bankruptcy because you just barely miss paying off your bills one time every month or if you feel overwhelmed by credit card debt, this may be a great option for you. You can also try doing nothing and living simply for a number of years, which will work very well if you have no family for whom you are responsible. Another option can be found in negotiating with your lenders. In the end, there are several different options other than bankruptcy, so always try to make sure that your second step is to consider them all.
Next step is to try to check out what the requirements are for eligibility and for declaring bankruptcy. If your debts are too high and your income is too low, you probably will not qualify for chapter 13 bankruptcy. On the other hand, if your income is too high and your debts are too low, you will probably not qualify for chapter 7 bankruptcy. In several cases, you might not qualify for either, and this is a sign that you did not think through your other choices.
Try to consider all of your property and debts if you do qualify. What will happen to your home? Your car? Your retirement plan? Every state has a different specification when it comes to this, so try to make sure that you understand how your property will or will not be taken. Further, it is always important to begin compiling lists of your assets and debts. Try to remember that some debts cannot be wiped out, such as child support payments.
Once you have all your information compiled, you can begin the declaration process. It is always best to work with a lawyer or financial professional in order to complete this task, and remember to always be completely honest. Declaring bankruptcy is not always for everyone, but it can possibly work for some people.
Gemma Markby is a contributing editor at DebtFinanceArticles.com. This article may be reproduced provided that its complete content, links and author byline are kept intact and unchanged. No additional links permitted. Hyperlinks and/or URLs must remain both human clickable and search engine spiderable.