When you have tried everything out and are still not able to resolve your debt and do not have a positive cash inflow, then it may be the right time for you to declare bankruptcy.
There are however certain conditions that you need to consider before you can go “Gung Ho” and declare bankruptcy. Once you have considered everything, only then you are eligible for declaring bankruptcy.
Declaring Bankruptcy Will Not Eliminate All Debts
Firstly, bankruptcy is not about telling that you have no money to pay for your bills and the government will take care of you. It is much more than that. You need to understand that there are certain bills that you are required to pay and the government will not handle all of them.
These include your children’s care and other loans like student loans etc.
You Need To Show That You Can No Longer Pay Your Debts
You need to be able to show that you don’t have any income whatsoever. If you can still pay off your debts in small amounts, then that is not a case of bankruptcy. As long as you are in a comfortable position to pay off small portions of your debt, you will not be eligible to go bankrupt.
There are different kinds of bankruptcies that you can declare. Depending on your needs, choose the right kind of declaration so that you can proceed with your life, rectifying mistakes and preventing the same things from happening again.
One kind of bankruptcy is where all your debts are wiped clean along with your privilege of buying any luxury items. Only essentials will be available to you and things like internet and computer may be deemed a luxury, depending on your situation. Another kind is to help you pay off your debt over a couple of years so that you don’t have to worry about losing your amenities but work towards paying off your bills.
Before you go bankrupt, you should take part in what is known as credit counseling. This is something that is offered by many organizations that are listed in the credit court. Typically, you need to do these classes sometime within six months before you declare your bankruptcy.
Once you have completed the classes, the last step is to go out and file your bankruptcy. Many states provide free legal aid to help you out with this. For this step, you will need to have all the relevant documents ready and produce them in the court. You will be asked to explain your financial situation in detail as well.
There are many disadvantages to filing for bankruptcy. Although bankruptcy isn’t anything anyone would ever want to do, it is inevitable for some. Before you make your decision be sure to get sound advice from someone you trust. This can be a friend who does well with finances or it could be a lawyer in your area.
Who ever you talk with be sure to be open and honest about yourself and your spending habits. Let them speak into your life with the freedom to say whatever they feel is best.