Filing for bankruptcy can be a tricky decision, and one usually made as a last resort. Generally considered by those who feel they are in a financial hole too deep to climb out, bankruptcy has both pros and cons associated with it. If you feel that filing for bankruptcy might be the best option, here are some tips you should take to prepare.
Take the following steps:
- Understand the bankruptcy process
Bankruptcy is a way to start clean; for this reason, it is popular for those who feel as if they have nowhere left to turn. However, there are negative consequences of filing for bankruptcy. For example, bankruptcy does not eliminate all debt, such as student loan debt and tax debt. Before proceeding, make sure that bankruptcy is the best solution rather than what seems easiest.
- Collect your paperwork
There is a lot of record keeping and documentation in the bankruptcy process. If you decide that bankruptcy is the best way to proceed, you will need to be able to prove your debt using financial documents like debt statements, notices form creditors, and unpaid bills.
- Set a rigid monthly budget
Many people are forced into filing for bankruptcy due to unnecessary expenditures or unforeseen circumstances, like the death of a spouse or termination of employment. By creating a budget and sticking to it, you will be able to cover your expenses throughout the bankruptcy process and establish good financial habits for the future. This will also help you prepare in the event anything unpredictable arises, such as legal fees or unexpected personal expenses.
- Determine the value of your assets
It is unlikely that those entering the bankruptcy process have investments or savings accounts but most people own a car, a home, or other valuable assets. Qualifying for bankruptcy is not always straightforward and having expensive or valuable assets may work against you throughout the process. By knowing the value of what you own, you will be able to make a more solid case.
- Seek legal help
Going through bankruptcy alone is nearly impossible. Before you file, seek a competent and well-trained attorney with experience handling bankruptcy cases. An expert’s input and guidance can simplify the process, reduce costs, and ensure you reach the best possible outcome.
One final step
Sometimes, financial crises are unavoidable. If you find yourself facing bankruptcy, do all you can to understand your situation, prepare yourself adequately, and do your best to break negative behaviors. With the proper understanding, preparation, and the guidance from a seasoned lawyer, you can make it through the bankruptcy process to find the clean start you desire.