Bankruptcy is a big decision and to consider or not consider bankruptcy there must be a careful review. A wrong decision can not only add to the misery currently and at the same time leave scars for several years. To make the decision easier, below we list some aspects of bankruptcy below-
- When to consider bankruptcy
Bankruptcy sometimes becomes inevitable or unavoidable due to the following reasons-
- Injury, illness, disability, long term medical treatments, or hefty medical bills
- Divorce is around the corner which might further add to financial vows
- Lenders are foreclosing on assets like homes and considering legal alternatives for defaulted payments
- You are thinking of additional debts to pay off your defaulted payments
- You are thinking of retirement account withdrawals to manage to raise debt payments
- What are some steps that can be taken before bankruptcy?
- An attempt to restructure loans from your lenders with a proposal to make practical payouts should be made
- Unnecessary costs need to be cut and the net household income needs must be identified, and a final consideration should be made on whether it is possible to run the show or not
- In case of uncertainty, it is best to not close out any of the loans or make any suspicious transactions as they could trigger unnecessary scrutiny
- Reach out to 888-297-6203 or https://www.recoverylawgroup.com/bankruptcy/ as early as you can to help make the right decision
- Do I even qualify for bankruptcy?
This is a very common question that is often ignored. There aren’t many criteria to qualify for being bankrupt however, there definitely are a few important considerations that are ignored often. Luxuries or necessities have different definitions for different people. Many people have a myth that by declaring bankruptcy they can dissolve all their debt and start afresh. However, it isn’t true. They end up losing a lot of their valuables and should reimagine their life with mere essential items to dissolve all their debts through bankruptcy.
- What are the impacts of bankruptcy?
Declaring bankruptcy can never be a beneficial situation. It can just make your life better to worse and prevent it from getting furthermore worst. There are several downsides to applying for bankruptcy which why no wonder it is often referred to as the last resort-
- Credit score
The credit score of the borrower takes a significant dip and it is unlikely that he/she may be able to avail of any unsecured loans for the next 5-10 years.
- Impact on co-signers
Co-signers are individuals who facilitate as guarantors for your loan. If your friends/relatives volunteered or you requested them to co-sign the loans you might default. It has an impact on the co-signer’s credit score and they may be liable for some amount defaulted by the borrower after bankruptcy settlement as well.
- Reputation damage
The records will now hold the bankrupt borrower’s name in a public directory which can be accessed by lenders and the public as well in general. Declaring bankruptcy causes a significant reputation and image loss which is difficult to rebuild again.