For some people, bankruptcy is a good idea. But filing for bankruptcy is not something that should be done lightly. There are many things to consider when deciding whether bankruptcy is a good idea for you. Other options should be considered before filing.
First, you should try talking to your creditors to see if you can work something out with them. They may be willing to change the terms on your debt so that you are able to repay it more easily. Explain your situation to them. If you have a good reason for having difficulty paying your bills, such as a reduction in income, be sure to let them know.
If you have tried to work things out with your creditors with no success, credit counseling is the next step. You should start by taking a class that will satisfy the requirement for credit counseling that must be done before filing for bankruptcy. You must take this class from an approved company in order for it to count. This class will give you a good idea of what options you have to help you avoid bankruptcy.
In some cases, a credit counseling agency will have more success negotiating with your creditors than you did. This is something you should try if most of your debt is credit card debt. This type of debt is the kind credit counseling agencies usually have the most success with.
So when is bankruptcy a good idea? When all else has failed and you still can't afford to pay the minimum payments on your debts each month. You are falling further and further behind every single month and creditors are calling every day, harassing you. Maybe you have even had one or more creditors take you to court and obtain a garnishment of your wages.
The good news is that, although bankruptcy is the worst negative you can have on your credit, it won't ruin your life forever. Most people who have gone through bankruptcy are able to obtain financing to purchase a home within two years. You can usually get approved for a bad credit auto loan much more quickly. Many dealers will finance the loan themselves just to make the sale. You can even get a credit card right after filing for bankruptcy if you're willing to put up a deposit for a secured card. However, if credit cards are what got you into trouble in the first place it might be a good idea to avoid them.
As soon as you file for bankruptcy, the harassing phone calls stop. It is against the law for creditors to continue trying to collect on a debt once they have been notified that you have filed for bankruptcy. You may still get calls for a few days after filling before the creditors receive their notices. If so, just tell the caller that you have filed for bankruptcy and they have to stop calling.
