Try These Three Tactics Before You File For Bankruptcy
If you have been in debt for a long time, you might be tempted to just throw up your hands and head to bankruptcy court to get a fresh start. But that clean start can end up hurting you in some ways too. You likely won't be able to get another loan for a number of years, and a bankruptcy showing up on your credit report could hurt you during a job search. Before you pull the trigger on a bankruptcy, sit down with a bankruptcy attorney and go over your options. Here are 3 different alternatives to bankruptcy that you or your lawyer should try before you go to court.
Call Your Creditors and Threaten Bankruptcy If They Don't Settle
One of the most annoying things about being in debt is the constant collection calls. But if you are in really bad shape and know you can't pay off everything you owe, this is actually an opportunity to turn the tables and negotiate from a powerful position. You or your attorney should call your creditors and tell them that if they don't settle the account for a percentage of what you owe, you are going to file for bankruptcy. If the debt is unsecured, a bankruptcy might mean that your creditor won't ever get a single cent from you. In this situation, they will be more likely to listen and negotiate with you. A settlement will still impact your credit, but typically won't be viewed as bad as a bankruptcy because you still made an effort to pay.
Go to Credit Counseling
One of the requirements for filing for bankruptcy in many states is the completion of a government certified credit counseling program. These programs will let you sit down with a professional and go over your finances. A good credit counselor may be able to find a way for you to work out a budget that can meet your needs so that you don't' have to go to bankruptcy court. Credit counseling is also a good idea as soon as you realize you are in trouble with debt. There's a better chance they can help get things under control if you go before you fall under water by a large amount.
Push Yourself Harder
One of the problems with debt is that it can make people depressed, which can then lead to a bad situation where they just out and buy more things to try and make themselves feel better or just give up on ever paying anything back. Take a hard look at yourself and ask your family for an honest assessment as well. Can you find the time to work a 2nd job? Are you really budgeting as responsibly as you should be? If you are willing to give yourself a reality check, you may find that bankruptcy is not necessary after all.
Filing for bankruptcy should always be a last resort as it can hurt your credit report for years. Before going to court, sit down with a bankruptcy attorney and go over your options. You may be able to negotiate with your creditors, or come up with a game plan that will allow you to pay back the debt as long as you stop being irresponsible. Talk to a lawyer like Thomas M. Denaro, Esq. for more information.