Should I File for Bankruptcy?
Should I file for bankruptcy? If you have creditors that are calling at all hours and bills that are piling up faster than you can pay them, you have definitely asked yourself this question. While you should always pay back your bills—it’s the right thing to do—you might have no choice but make a clean break. One of the harder bankruptcy facts to accept is that sometimes bankruptcy is the best option.
If you are wondering, should I file for bankruptcy?, spend some time thinking about your various options:
- You might think about debt consolidation, which can combine all your debts into one loan so that you can make one payment at a time.
- Hiring a reputable debt consolidation company is also an option, but like debt settlement companies, some unscrupulous companies might end up costing you time and money.
- Loan modification programs and reductions in payments are another option for distressed homeowners. Perhaps you can contact the hardship departments for your creditors and ask them to consider a change in terms that will allow you to float above water. Especially during a financial crisis, banks want to help their clients make their payments. They know that many people are teetering on the verge of bankruptcy. In fact, you might want to call your mortgage lender and ask: “Should I file for bankruptcy, or can I qualify for a loan modification program?” Rather than having all your debt discharged during a bankruptcy, many creditors will simply lower your payments. After all, something is better than nothing.
“Should I file for bankruptcy if none of these options are available?”
That said, if you have exhausted all options, you might want to consider filing bankruptcy, especially if you face the possibility of losing property. (Bankruptcy enables many people to hold on to their property despite their financial woes.) The first determination that you need to make as you consider bankruptcy is based on your finances. If you are in a situation where you can’t dig yourself out from a mountain of debt, then bankruptcy can stop creditors from charging late fees and interest on your bills. If you are at this point, considering one of the various forms of bankruptcy options may be the best option so you can make a fresh start. Plus, you won’t have to worry about being harassed by creditors every day and losing sleep as a result of worrying about your debts.
That said, a bankruptcy will definitely harm your credit, but if you are already too deeply in debt to repay your debts, your credit will probably be severely tarnished after several more years of collection notices and repossessions.
Once you declare bankruptcy, the next step in regaining your credit is to embark on a robust credit repair campaign. If you can improve your credit score by changing your habits and paying your bills on time, you can slowly begin regain financial stability. In fact, if you are diligent about repairing your credit and establishing good financial habits, you might even qualify for a home loan within two years of declaring bankruptcy!
Ultimately, your question—”Should I file for bankruptcy?”—is a personal one. You must learn how to create a budget, consider all of your bankruptcy options, and then make a strategic choice. If you cannot find a light at the end of the tunnel and know that bankruptcy is eventually inevitable, you should begin the process today so you can start rebuilding your future and your credit score.
