Apr 11
4
Filing Bankruptcy May Or May Not Be The Answer For You
Filing bankruptcy might seem like the quick and easy out of the sticky situation you are in especially if you have a lot of debt under your name. You have probably heard from the news or from people you know that filing bankruptcy is a breeze and after the filing, you will be literally be freed from the debt you have incurred over the years. It is all true, that filing bankruptcy is not terribly difficult to do, and that your debt will be wiped clean post bankruptcy proceedings. But you should also be made aware of the consequences of filing for bankruptcy protection. It is not a get out of jail free pass, like what you have in the game of monopoly (initially made popular by Parker Brothers, which was eventually sold to Hasbro), but it is a serious decision that you have to take time to review and make sure that this decision is truly for you, and your family if you have one.
Why You Should Not File For Bankruptcy
If you actually have the means to payback your creditors in reasonable amount of time, then I strongly believe you should consider paying off your creditors and not file for bankruptcy protection. Talk to your creditors and work out a deal. Tell your creditors that you can pay them 50 cents on the dollar, hence cutting your debt obligation by 50%. Tell your creditors that you have limited funds to pay them back and the last thing you will want is to resort to filing for bankruptcy protection. Generally speaking the creditors, in this economic situation, will be happy to take 50% of the debt that is owed to them than nothing at all. Before you call your creditors, have a number in mind that you want to negotiate with the creditors. If you think you can pay for 75% of the debt, then start out by asking to pay back only 50% of the debt. It is a negotiation, and the creditors will try to retain as much payback as possible.
Ideally if you have the means to pay back (even if it is just a portion of the debt that you owe) the creditors, you should try as much as possible to pay back the creditors. The consequence for filing bankruptcy is that you will have the record that you have filed for bankruptcy for the next 7-10 years in your credit history. Having the mark that you have filed for bankruptcy means that you will have poor credit history and poor credit score for an extended period of time. It is true that you can repair your credit history and credit score, but it is a long and tedious task which require a lot of time and dedication.
Benefits Of Filing Bankruptcy
If you have so much debt that it will literally take you 5-10 years to pay back the creditors, then you are a good candidate to file for bankruptcy. The simple reason is that the time it takes you to payback the creditors, you are already in danger of ruining your credit report and credit history. If that is the case that your credit report and credit history is inevitably damaged, why not save yourself the headache, and money of course, and file for bankruptcy. Since you will need to find a way to repair your credit, and you can “save” the money that you are planning to use to payback the creditors, it will turn out to be a “win-win” situation for you if you are in such dire financial situation.
Essentially once you have filed for bankruptcy protection, the creditors are legally required to stop hounding you for the repayment of the debt until the ruling of the bankruptcy court. When and if your bankruptcy case has been approved, the debt that you have listed in your bankruptcy petition will be fully discharged, meaning totally wiped out, which means you will never have to pay back the creditors. This is also a good way for you to start out fresh financially without having any debt having over your head.
Is Filing Bankruptcy A Good Idea
Hence we have finally come back to the main topic of this blog piece. Filing bankruptcy can be a good way to get rid of the heavy debt you have put yourself into. But there are definitely situations that filing bankruptcy is not the most ideal solution for your particular situation. Your best option is to talk to a bankruptcy lawyer to get all the pros and cons if you choose to file for bankruptcy protection. Filing bankruptcy is a life changing event and should never be taken lightly. Almost all the bankruptcy lawyers have free initial consultation which will allow you to get all the necessary information you will need. You have nothing to lose by talking to a bankruptcy lawyer to find out what you will be facing whether you are in the pre bankruptcy phase, or the post bankruptcy stage.