Although “bankruptcy” is a scary word to many people, it is nothing to be afraid of or ashamed about. This is a legally valid tool for those in a great amount of debt to get out of dire financial straits and realize a better, brighter future. That said, it is a significant step that will change things for you and your finances for several years. Essentially, it is not an action to be taken lightly.
This is why it would likely be useful for you to explore the following options before you make the decision to file for bankruptcy. This blog will lay out some actions you can take that could be beneficial for you and your finances.
1. Speak directly with your creditors. Your creditors (people you owe money to) will make it clear to you whether or not they are interested in collecting on your debt. They will always be interested, but their incessant calls, emails, and letters will let you know their level of interest. Sometimes, it is worth it to speak with them directly and try to negotiate a deal. You could offer to pay back what you can and see if they agree to it. After all, such an arrangement is similar to what happens in a Chapter 13 bankruptcy (debt repayment plan). Reaching out directly to your creditors can, at the very least, buy you some time.
2. Sell assets that you can bear to part with. Take an inventory of all your assets and determine whether or not there are some that you can do without. If there are some, consider selling it to get your creditors off your back. If you qualify for Chapter 7 bankruptcy (liquidation) and decide to proceed with that type, you might have to give up some of your assets as collateral. However, don’t resign yourself to this fate if it is not certain.
3. Debt consolidation. If you owe money to multiple creditors, you might want to consider taking out a loan that consolidates all your debt into one instrument. This can lower your overall monthly fees because you are not having to fork over administrative fees for each creditor. You can even borrow against your home equity, but it is best to confer with a financial professional before taking this step.
4. Consult a bankruptcy attorney. If you aren’t sure if bankruptcy is the right option for you, but you’re struggling financially and you need to find a solution, it can be helpful to talk to an attorney about your options. The Hedtke Law Group is here to help. If you have any questions about bankruptcy, or bankruptcy alternatives, we encourage you to contact us today!