Things You Should Know Before You File For Bankruptcy
Things You Should Know Before You File For Bankruptcy
Many individuals have found themselves in a financial pickle with the downward turn of the world economy. Some have lost their jobs and are facing foreclosure on their homes and repossession on their vehicles. This added to a lot of unsecured credit card debt has many individuals thinking they should file for bankruptcy. Before you take that step here are some things you should consider.
If you are thinking of using a consumer credit counseling agency to get caught up on your past due bills, you should be cautious in which one you choose. Many of these agencies will charge you an upfront fee and then tell you to pay your credit cards before you pay anything else. This is very bad advice which can make you lose your home if you are already behind in your bills.
Depending upon how far behind you actually are, it may be possible for you to create a budget and dig yourself out of your financial hole in this manner. This usually works well for those individuals who are only two or three months behind on credit card bills. If you can honestly sit down and cut all the extra spending from your budget and see how you can get caught up, then this may be your best option. If you cannot see a way to do this and get caught up within two or three months, then this is probably not an option.
Debt collectors will try to do their job to the best of their ability. If they don’t make you pay, then they are not going to get paid themselves. Some of these collectors will try to convince you to put everything else off and pay the bill for which they are collecting. There are two things which you cannot do without, which are your home and your automobile. They may try to get you to put off your mortgage payment and spend it on catching up past the credit cards. Don’t do it.
Someday collection agencies will even try to get you to cash in your IRA or your 401(k) plan to pay past due debts. Do not even think about taking this action. The money put away into these accounts are there to pay for your future retirement, not past due bills. A lot of collectors will try to make you feel bad so you will give in. Keep those accounts where they are because even if you did use it you would be hit with big tax penalties which could potentially put you back where you are now, except it will be the government calling you instead.
When you have to file for bankruptcy, don’t look at it as though your life is ending. You should in fact look at it as a new start in life. It is something which no one really wants to face, but in life there are no guarantees of how well things will go for us.
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