We are in a difficult economic state these days. When there is a bad economy there are a lot of people losing their jobs and having problems with debt. For a lot of people, filing for bankruptcy is the only logical solution. When you or a loved one is contemplating bankruptcy, it is important to read the following piece in order to understand available alternatives.
Familiarize Yourself
Lots of people have to claim bankruptcy when their bills are larger than their income. If you’re in this position, it is a good thing to familiarize yourself with the laws that apply in your area. Different states use different laws when it comes to bankruptcy. Some states may protect you home, and some may not. Familiarize yourself with the bankruptcy laws of your state prior to filing.
Don’t look at bankruptcy as a first step. Look at all the other options you may have first. You have other options available like consumer credit counselling services. Bankruptcy is a serious negative on your credit history so make sure you have no other options before you file. It is important to keep your credit history as positive as possible.
Unsecured Credit
Getting unsecured credit post-bankruptcy will likely be difficult. If this happens to you, think about applying for a couple of secured credit cards. Having a credit card of any type will allow creditors to realize that you’re attempting to work in the right direction to repair your credit. In time, you might be granted unsecured credit again.
Don’t pay to for an initial consultation with a bankruptcy attorney, and thoroughly question each candidate. Most attorneys offer free initial consultations, and you should take advantage of the chance to interview multiple practitioners. The lawyer who properly answers your questions is the one you should hire. There is no need to feel rushed to decide to file after you talk with your bankruptcy lawyer. This offers you the opportunity to speak with other attorneys.
Before you file, make sure you understand current bankruptcy laws. Bankruptcy laws are in constant flux, so just because you knew the law last year doesn’t mean that the laws will be the same this year. A qualified bankruptcy attorney is the best source for the latest information regarding the laws in your state.
Before making your decision to file for bankruptcy, double-check to see if other, less drastic options could make sense. If your debts are really not overwhelming, you may find the assistance you need by consulting a consumer credit counselor. Negotiating with creditors is another option, but creditors are notorious for “forgetting” these agreements, so get them in writing!
Take advantage of the opportunity to consult with a number of bankruptcy lawyers who offer the first visit at no charge. Make sure that you meet with an actual lawyer and not an assistant or paralegal, as these people are not allowed to provide legal advice. Looking for an attorney will help you find a lawyer you feel good around.
If your income exceeds your obligations, you should not seek bankruptcy protection. While filing may seem simple and a way to get out of paying your debts, it does tremendous amounts of long-term harm to your credit report.
Repayment Plans
Think about all your options before pulling the trigger. A lawyer that specializes in bankruptcy law can help advise you of other options, such as repayment plans and reducing interest rates to relieve some of the burden. If foreclosure is imminent, see if your loan can be altered at all through a modification plan. Sometimes your lender will work with you to help pay off your debt by giving you a lower interest rate, forgiving late fees, or extending the time period of your loan. When all is said and done, creditors want their money and find repayment plans preferable to not getting paid at all.
Carefully consider filing for bankruptcy on loans that have a co-signer, especially if that co-signer is a business associate, close friend or relative. You can relieve yourself of any liability for debts that you may share with someone else through a Chapter 7 filing. Although, your creditors may insist that the co-debtor pay off the entire debt.
If you are in the midst of a Chapter 13 bankruptcy, it is possible to apply for certain loans. However, it won’t be as easy as it may have been to get one prior to the bankruptcy. You will have to see your trustee and the approval for this new loan. When meeting with the trustee, bring a budget which shows that you will be able to afford the payment on the loan you are trying to get. You should also be prepared to explain why you need to purchase the item.
Don’t wait till it’s too late to file for bankruptcy. It is a big mistake to avoid financial problems, thinking they may go away on their own. It is too easy for debt to mount up and become uncontrollable, which could lead to loss of assets or wages. As soon as you see your debts getting out of control, seek the counsel of a good bankruptcy attorney to see what your options are.
Although the economy is slowly picking up, there are still many people left without jobs and a decent wage. That said, it is possible to avoid bankruptcy even if you are having cash flow problems. This article should have given you some solid advice for staying afloat in tough times. Good luck to you.
