National non-profit offers consumers’ insight into what they need to consider before entering into bankruptcy
Boston, MA – January 24, 2013
Bankruptcy filings fell nearly 14 percent to fewer than 1.2 million in 2012, continuing a two-year trend that has been observed in all 50 states. But for many consumers still faced with insurmountable debt, an environment of continued economic uncertainty has forced them to consider bankruptcy as their only alternative.
“Too often all it takes is one bad break, like a job loss or costly medical procedure, to force someone to file for bankruptcy,” said Steve Trumble, President and CEO of Newton-based American Consumer Credit Counseling. “Most people who file for bankruptcy are facing threats of repossession and perhaps imminent foreclosure. Filing for bankruptcy is sometimes the only way they can stay in their homes.”
For those consumers who are contemplating bankruptcy as an option, there are several considerations that need to be made before filing.
- Educate yourself on the process. Bankruptcy can be complex and overwhelming. It should not be undertaken alone. Utilize online resources and do your homework to become more familiar with what to expect.
- Get a good picture of your finances, including a copy of your credit report. The first step in the process is to know where your credit score currently stands and what your overall financial portfolio looks like. It’s important to remember that your credit score will fall dramatically once you’ve filed and will take about seven years to recover.
- Find a bankruptcy attorney. All too often consumers think they can save on legal fees, but the guidance and support you get from hiring an attorney far outweighs the costs. It is important to feel secure by having a reputable and knowledgeable attorney to help guide you through the process and avoid dismissal.
- Enroll in a pre-filing credit counseling course. If a consumer plans to file for bankruptcy protection, they must get credit counseling from a government-approved organization within 180 days before filing. This session should include an evaluation of the personal financial situation, a discussion of alternatives to bankruptcy, and a personal budget plan. On average the counseling session should last about 60 to 90 minutes.
- Prepare for the financial future and how to improve your credit rating. One of the easiest ways to start re-establishing credit is with a secured credit card from a bank, which requires that the consumer provides the lending institution with money and the bank will give the consumer a credit line equal to that amount. Also, create long-term goals, such as saving for a home, to help motivate you to save.
“No matter the reason for filing, it’s critically important for consumers to understand that they are not alone in this process and to utilize the resources that are available,” said Trumble. “Filing for bankruptcy can often be a lengthy and complex process, which is why it’s imperative that consumers be able to rely on experienced, validated and reputable agencies that can provide the type of education necessary during this process.”
ACCC provides both the pre-bankruptcy counseling and the post debtor education course that the government requires before a consumer can file their bankruptcy and discharge debts through bankruptcy. Counseling is available face-to-face, online, and over the phone. To make an appointment or get more information, call 866-826-6924 or click here.