Sometimes, your only way out of a financial crisis and consumer debt is bankruptcy. If this is the case, important that you are aware of the considerations prior to filing bankruptcy. Here are 5 things to consider.
5 Considerations Prior To Filing Bankruptcy
A situation such as a job loss or costly medical procedure can force someone to file for bankruptcy. Filing for bankruptcy is sometimes the only way they can stay in their homes. Therefore identifying the necessary considerations prior to filing bankruptcy is crucial.
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.
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.
Find a bankruptcy attorney.
Consumers often think they can save on legal fees, but the guidance 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 you through the process. An attorney can also help you avoid dismissal. This will also help you tie up all loose ends to ensure you have a fresh start for life after bankruptcy.
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.
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.
If you’re struggling to pay off debt, ACCC can help. Schedule a free credit counseling session with us today.