If you’re struggling with the consequences of bad credit and making ends meet, you’ve probably considered declaring bankruptcy. After all, 97% of bankruptcies filed every year in America, are filed by individuals with the second biggest cause of bankruptcy filings being credit debt. But does this mean filing for bankruptcy is the right choice for you?
Before making any decisions, it’s important to ask yourself some tough questions. Here are four important questions to ask yourself before filing for bankruptcy if you have bad credit.
Have I Considered Alternatives?
When you have bad credit, it can be easy to feel like you’re out of options. But before you file for bankruptcy, it’s important to explore all of your other options. There may be other ways to get your finances back on track that doesn’t involve bankruptcy. Some of these alternatives include:
- Debt settlement: Renegotiate your debt with your lender to repay a loan balance portion.
- Debt management: Enlist the help of credit or debt counseling agencies to manage the debt you owe.
- Using a debt payoff planner: An mobile app such as the Savvy Debt Payoff Planner that helps you eliminate your debt.
- A debt consolidation loan: This loan could lower the interest that you’re paying and help you clear your debt faster.
Can I afford to file for bankruptcy?
Filing for bankruptcy is a big decision and it can be expensive. You will need to pay court costs and attorney fees, which can add up quickly. In addition, you may have to give up some of your assets to pay off your debts. Still, it can provide some much-needed relief from overwhelming debt.
What are the consequences of bankruptcy on my credit score?
Filing for bankruptcy as a side effect of bad credit comes with a number of consequences. For example:
- Filers will likely see a significant drop in their credit score
- It will be more difficult to obtain new lines of credit
- Bankruptcy can stay on your credit report for up to 10 years
As a result, it is important to consult with a bankruptcy attorney to see if filing for bankruptcy is the right option for you. An attorney can help you understand the bankruptcy process and determine whether you can afford to file for bankruptcy. When it comes to financial health, consulting with an expert is always the best option.
How long will it take me to recover from filing for bankruptcy protection?
The bankruptcy process can be very stressful, and it can take a toll on your financial health. The process can be complex and time-consuming, but once it is complete, you can begin to rebuild your credit and improve your financial health. The length of time it takes to recover from bankruptcy depends on many factors, including:
- The type of bankruptcy you filed for
- Your financial situation before filing
- Your ability to make payments after filing.
While it may take several years to fully recover from bankruptcy, the process can help you get back on track financially and improve your long-term financial health.
The bottom line
Bankruptcy is not the solution for everyone, but it may be the right choice for you. By answering these questions honestly, you can get a better idea of what’s best for your unique situation and make an informed decision.
However, this doesn’t mean that filing for bankruptcy won’t be a stressful experience. Make sure you have a financial self-care routine in place to help you feel more in control. You can check out this infographic for some great tips to kick the financial stress that comes with filing for bankruptcy to the curb.
