Should You File For Bankruptcy?

Drowning under debt and have no means of paying it off? There could be a way out – to declare yourself bankrupt. While bankruptcy is far from an ideal solution and likely to have some negative impacts, it can sometimes be the best option when facing financial struggle. By writing off your debts, you can enjoy a fresh start. Here are just a few things to consider before you take the decision to file for bankruptcy.

Understand the pros and cons of bankruptcy

Bankruptcy has many pros and cons that are worth fully understanding first. Below are some of these pros and cons

Pros:

·         It’s a relatively quick way to wipe any debts you have, allowing you to start fresh

·         Once your debts are written off, creditors can no longer contact you

·         Going bankrupt can protect you from losing your home to debt

·         An appointed administrator will handle the whole bankruptcy process

Cons:

·         Your credit score will be damaged, which could affect your future ability to do everything from taking out loans to taking out a phone contract

·         You may keep your home, but may have to sacrifice other assets (including your car or your business)

·         All your financial affairs will be examined closely – any dodgy dealings that come to light may result in criminal charges

·         Most debts will be wiped but some cannot be written off. These include fines, child maintenance and court orders

Make sure you’ve explored other forms of debt relief

There are other forms of debt relief that can have less cons, although you may not be able to wipe your debt as quickly. You should look into these first before resorting to bankruptcy.

One option could be to consolidate your debt. If you owe lots of separate creditors, you may be able to pay off these multiple debts by taking out one single loan. This loan could be easier to keep track of and pay off.

There are also debt relief experts that can help you negotiate with creditors and reduce your debts. This could allow you to pay them off more easily without having to sacrifice assets or suffer a low credit score. It is prudent to consult experienced debt relief attorneys in situations where legal action may have already been taken against you, according to the experts at PA bankruptcy lawyers, because there will also be complicated litigation procedural steps to consider.  

Get the right legal support

Legal support is often worthwhile pursuing when going bankrupt. If you need to file for bankruptcy in divorce, legal advisors may be able to help you deal with joint debts and may be able to help recommend when to file for divorce. If you own a business, legal advisors may also be able to help you handle the bankruptcy process while causing as little damage to your business as possible (if you do have to give up your business, legal support may be useful for limiting the damage caused to your employees and ongoing clients).

Prepare for life after bankruptcy

Without the option to borrow money after, you’ll need to be prepared to live within your means, which could mean budgeting more effectively. It could be worth looking into credit repair programs to help you rebuild your credit score. If your livelihood is likely to be affected, you also may need to consider new sources of income.