Making the decision to file for bankruptcy should never be taken lightly. It may be important to consult with a financial advisor and, if necessary, an attorney to go over the specifics of your situation. Financial health can impact so many aspects of your life. Determining how to move forward when sorting out your debt can help to alleviate stress you may be carrying with you as a result.
What is Bankruptcy?
It can be easy to find yourself in over your head very quickly when it comes to debt. Often borrowers lend more to a person than they are realistically able to pay back. When a person has more debt than they can manage, it may make sense to go through the bankruptcy process. The most common type of bankruptcy that is filed is called a Chapter 7. A judge will go over all of the information provided and determine which debts will be forgiven and which will need to be resolved.
In this process, all assets are valued and then in some cases, liquidated in order to pay creditors. When Chapter 7 Bankruptcy is filed, the impact can be lasting. Your credit report will carry this for 10 years.
Meeting with a financial consultant is a good place to start when you are determining whether you should file for bankruptcy. When looking for a financial advisor, be sure that they are a certified financial planner. Having CFP qualifications ensures that you are working with a qualified, experienced adviser. They will be able to go over your finances with you and may even be able to offer some alternatives to filing for bankruptcy. As alternatives to filing for bankruptcy a financial advisor may suggest one or more of the following:
- Spend Less: Making small changes can help to keep some money in your wallet. Things like following a budget and cutting back on things like eating out or shopping can make a big impact.
- Debt Consolidation: It may make sense to take out a loan to pay off your debt. This could be a way of encompassing all debt into one lump sum, making it easier to pay off.
- Asset Liquidation: If you have anything of value that could be sold, it may be advised that you sell those assets. Selling things like jewelry, or cars could help you to regain some cash in order to settle some debts.
- Settling Debts: When you haven’t made payments on your accounts, you may be able to settle with creditors for a lesser amount. The drawback to this is that it would impact your credit score.
Consulting an attorney with Chapter 7 Bankruptcy experience such as the bankruptcy lawyer Phoenix, AZ locals trust will be important when going through the process. With their help, you will be rest assured that your best interests will be protected; and you will receive the best outcome possible.
Thanks to authors at Kamper Estrada LLP for their insight into Bankruptcy Law.