Declaring Bankruptcy Should Be Your Last Option
Declaring bankruptcy should be an epiphany that you simply made bad choices and judgments with your finances. In most cases, it is only when declaring bankruptcy that people get to realize the things they should never have done; things that could have been avoided had they simply stopped for a moment to consider the implications of their actions.
It does not take any sophisticated machine or software to alert you to the fact that you have been over-spending, spending more than you actually earn and accumulating debt. Experts say that people are actually aware of even the slightest abnormal fluctuation of their expenses and income. They can see and feel when there is financial imbalance, yet very few act on it until it is too late. When it is indeed and you are ready in declaring bankruptcy, a few tips could make the experience less traumatic and painful.
Before declaring bankruptcy, destroy all your credit cards! Give yourself a realistic timetable to pay most if not all your credit card debts. Choose the one with the highest interest rate and try to completely erase your debt on that one. The point here is that all credit cards with clean balances by the time you do file will be good; you may still be able to use them after the resolution of your case. Just be sure to inform the credit card company about your case. Before declaring bankruptcy, you may still want to see if available options can bail you out with the reminder that bankruptcy should always be the last resort.
Go back to your credit card companies or other creditors and work out a payment scheme. They will be more than willing since in a bankruptcy, they will certainly get less of you owe them or worse, none at all. If you want to do this with the help of a professional, you can avail of the services of a Credit Counseling agency that will make the necessary evaluation of all of your spending habits, current financial situation and can make arrangements with your creditors for payments. Before declaring bankruptcy, do your research. Find a lawyer friend or anyone who has legal expertise to walk you through the federal and state bankruptcy laws. You have to remember that your bankruptcy filing will stay on your credit report for up to 10 years. For most people, this is enough reason to choose alternative courses of addressing their debt as this negative rating on their credit report makes for applying for loans and insurance very difficult. There have been cases when higher interest rates as high as 26% on credit cards has been imposed. If you feel that your Credit Card Counseling organization does not have enough teeth, try a debt management plan. A Debt Management Plan will allow you to deposit money on a monthly basis through a credit counseling organization which is then used to pay for whatever debt that you need to pay. Your creditors participate in this program by providing the schedule for the payments as well as other concessions like perhaps, lowering your interest rates, but this depends on the lender. Done successfully, a DMP should be able to eliminate whatever debts you may have within a period of 2 years.
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