If you are accumulating too much debt, you may think about filing for bankruptcy. While it may sound intimidating to go bankrupt, it may be a good option for you. It can help you get free from crippling debts and start over.
However, before you rush into filing for bankruptcy, there are some things to handle. Here are some steps you should take before declaring bankruptcy.
1. Review your finances
You should have a clear picture of your financial situation before filing. At the very least, you should understand your income, expenses and total debts. Figure out what is causing your debt. You should also request your credit report for free before filing for bankruptcy. Not only will your credit report be an indication of your financial troubles, but it will also give you a good list of the creditors you owe.
2. Avoid racking up more debt
If you gather too much debt too close to your filing, the creditor may claim you are committing fraud. Do not spend frivolously on luxury items if you are considering bankruptcy. If you take on new debt, make sure it is for necessities such as food, utilities or medical bills.
3. Stop automatic payments
You may have settings on your credit cards or bank accounts to make automatic payments. Whether you have these for utilities or monthly subscriptions, you should freeze them before you declare bankruptcy.
4. Get legal help
According to CreditCards.com, talking to an attorney is essential before moving forward with bankruptcy. It is risky to attempt to handle it by yourself because the laws are so complex. Not only do you need assistance understanding bankruptcy laws, but you need someone who will steer you on the right path and tell you about your best options.
You do not need to feel fear or shame when it comes to bankruptcy – just make sure it is the right decision and you are ready for it.