What To Do If You’re Going Bankrupt

When you no longer have the ability to pay your debts and are financially crippled, declaring bankruptcy is the most viable option. Bankruptcy should be seen as the last option after trying a number of other alternatives. Once you have tried to contact creditors to have the debt restructured, made a hardship application and restructured your finances only to find that you can’t change the situation, bankruptcy is the next stage. Once you have made the decision to file for bankruptcy, there are a few steps you need to take in order to make it as painless a process as possible.

Get Legal Representation
For the sake of your sanity, when you are going bankrupt, you need to find a lawyer who specializes in bankruptcy. Some people attempt to do it themselves but it’s a risky process and is physically, mentally and emotionally demanding. Considering the fact that you’re already having difficulties, it would be a good idea to let an expert take charge. Try and find a lawyer who only asks for part of the payment up-front. As you’re about to declare bankruptcy, you don’t exactly have a huge amount of money to play with. Once you have a lawyer, you can contact your creditors and inform them of this event. This will give you some breathing space as the creditors back off.

Make Sacrifices
Once you have made the big decision, it’s time to stop spending and this includes credit card usage. If you use a credit card after declaring bankruptcy, you’re essentially admitting that you have no intention of paying the money back. The legal definition of this is fraud so watch your step. Concentrate only on paying bills relating to rent, utilities, insurance and other essentials. Don’t repay your credit card. Use this money to find a bankruptcy lawyer. You will now be living a life where cash must be used for everything you pay for. You also have to prove to a bankruptcy trustee that you can’t afford to pay your bills. If you have expensive luxury items, sell them for cash and downgrade. Be aware of the fact that bankruptcy laws change depending on the state so ask a lawyer for assistance.

Staging A Recovery
A bankruptcy will remain on your credit history for up to 10 years after the event though its effect diminishes as the years go by. You need to have a plan when it comes to living life after bankruptcy. Whether you plan to rebuild a business empire or merely live in relative comfort, you need to draw up a recovery roadmap. Once your debts have been discharged, you need to open a savings account as soon as you can and add to it whenever possible. Aim to have more than $2,500 in this account within 6 months. About a month after the discharge, look for a secured credit card. You also should start saving towards a down payment on a new car. As you know, life in America is hard enough without relying solely on public transport.

Although the above information depends on your state of residence and your recovery is entirely down to your personal priorities, what you read above should provide you with some idea of how to cope with an impending bankruptcy.