Are you thinking of filing for bankruptcy? Like many people, you are probably faced with mounting debts that are impossible to repay. While bankruptcy is not in the best interest of everyone who is drowning in debt, it is a viable option for many. There are many misconceptions about bankruptcy so it’s important that you know the facts before making any major financial decisions. Here are some things to consider.

First off, you need to understand that bankruptcy is not giving up or failing. Sometimes people end up in circumstances that are unmanageable. Maybe you’ve tried different ways of handling your debt, such as debt consolidation, but nothing seems to fix the financial situation. Bankruptcy doesn’t mean you’re a failure and in many situations it’s the best option. It will provide you with a clean slate and give you a new outlook on your finances. You can stop being haunted by poor choices made in the past.

Bankruptcy will leave your credit report tarnished and that may be hard to grasp for someone who has excellent credit. Excellent credit is usually what gets you into unmanageable debt. You might be thinking that you won’t be able to have credit in the foreseeable future but that is not the case. After filing bankruptcy you will probably be receiving many pre-approved credit card applications, especially if you had good credit before the filing. This is because lenders know that without the bills you’ll have extra income. These cards will have a low limit and high interest but that can be useful if you can control your credit card usage and only use them when necessary.

Many also think that they won’t be able to buy a home for several years but this is also not necessarily the case. Lenders have been know to offer home loans in as little as 18 months after filing bankruptcy

Before filing it’s important that you are aware of the laws and well informed about what is required. Some assets will be protected but others are vulnerable. Also, bankruptcy won’t clear all of your debt. For example, student loans are not usually erased; you will still need to keep current and full payments in order to manage your debt.

Due to all of the technicalities and laws, it’s important to hire a reputable bankruptcy lawyer. Not only will they help you with the filing but they can help you with harassing creditors. There will be a cost for a bankruptcy lawyer but it will save you time and money in the end. There are many ads on TV and the internet for bankruptcy lawyers but choose carefully. A reputable bankruptcy lawyer will unusually offer you a free one-on-one consultation.

To help you determine if bankruptcy is a good option for you and to learn about alternatives, seek the help of a credit counseling service. A counselor will look at your finances and give you their recommendation.

Tags: Finance

This entry was posted on Friday, August 21st, 2009 at 10:31 am and is filed under Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.