It’s not easy to admit to yourself that bankruptcy might be worth considering. But burying your head in the sand when you have big financial problems is never a good idea. If this is a realistic option for you, you need to consider it. However, before you can do that, there are some things that you should definitely know about bankruptcy, what it means and what it might entail for you. Read on now to learn about all this.
This is a contributed post and do not necessarily reflect the opinions of Meet The Harris Family.
You Have the Right to a Fresh Start
The first thing to know is that you do have a right to file for bankruptcy. If you feel it’s the best financial option for you. It gives you the opportunity to start again and leave your past problems and mistakes behind you. It really is a fundamental right and one that you should feel free to exercise after careful thought and consideration.
There Are Different Types of Bankruptcy
There’s not just one type of bankruptcy. It pays off to know about the differences between the two main options before you push ahead. Those two types of bankruptcy are chapter 7 and chapter 13. Chapter 13 bankruptcies aim to reorganize your debts and to help you pay them off. Chapter 7 is about liquidating your assets and using the money generated to pay your creditors.
Understand the Impact on Your Credit Score
One thing that will be very severely damaged by your choice to enter bankruptcy proceedings is your credit score. You will not be able to borrow money for a while and you’ll have to work hard to rebuild that credit score if you want to get back to where you were before. It’s important to be ready for this because it can be difficult for many people to adapt to the new situation.
Credit Card Debts May Not Be Completely Discharged
It’s not necessarily the case that all of your debts will be wiped out when you’re finished with your bankruptcy proceedings. For example, credit card debt will usually not be covered if you were spending it close to when you filed for bankruptcy. That’s the case because you never had any intention of paying off your credit card.
There’ll be a Lot of Documents to Handle
There are many documents for you to deal with and paperwork to complete when going through bankruptcy. You need to be prepared for this because, it can put a strain you. If bankruptcy is the right thing for you, the paperwork will just be something that you have to put up with.
Bankruptcy is one of those words that people don’t always like talking about openly. But there’s no shame in it nowadays. It’s not the right solution for everyone but, it can organize and rebuild your financial life.
