Heavy loads of consumer debt coupled with economic uncertainty sometimes forces consumers to file bankruptcy. This is a legitimate financial route and shouldn’t be dismissed or underestimated. However, there are certain things to know before filing for bankruptcy.
Things to Know Before Filing for Bankruptcy
For those consumers who are considering filing for bankruptcy, here are some things to know!
Educate yourself on the process.
Bankruptcy can be complex and overwhelming. It should not be undertaken alone. Utilize online resources and do your homework to become more familiar with what to expect. Talk with any friends or relatives who may have undergone a bankruptcy in the past.
Get a good picture of your finances, including a copy of your credit report.
The first step in the process is to know where your credit score and credit history currently stands. Also, have a good understanding of your overall financial portfolio. Your credit score will fall dramatically once you’ve filed and will take about seven years to recover.
Find a bankruptcy attorney.
All too often consumers think they can save on legal fees by avoiding an attorney. However, the guidance and support you get from hiring an attorney far outweighs the costs. It is important to feel secure by having a reputable and knowledgeable attorney to help guide you through the process and avoid dismissal.
Enroll in a pre-filing credit counseling course.
If a consumer plans to file for bankruptcy protection, they are required to get credit counseling from a government-approved organization within 180 days before filing. This session should include an evaluation of the personal financial situation, a discussion of alternatives to bankruptcy, and a personal budget plan. On average the counseling session should last about 60 to 90 minutes.
Prepare for the financial future and how to improve your credit rating.
One of the easiest ways to start re-establishing credit is with a secured credit card from a bank, which requires that the consumer provides the lending institution with money and the bank will give the consumer a credit line equal to that amount. Also, create long-term goals, such as saving for a home, to help motivate you to save.
ACCC provides both the pre-bankruptcy counseling and the post debtor education course that the government requires before a consumer can file their bankruptcy and discharge debts through bankruptcy. Call 800-769-3571 today!