When Is It The Right Time To File For Bankruptcy?

Have you been dealing with financial issues over the past few years? If a job loss or an unexpected expense has drained your savings account and maxed out your credit cards, you may be wondering what you can do to deal with your debt. How do you know if now is the right time to file for bankruptcy?

Have You Tried Negotiating With Your Creditors?

The first thing that you do is attempt to negotiate a debt settlement. If approved, your debt will be slashed by as much as half. However, you will most likely need to pay the reduced balance when the settlement is approved. Therefore, it may not be a good option for you if you don't have any money in the bank.

Credit Counseling Could Be Right For You

Credit counseling services will work with your creditors to negotiate lower monthly debt payments. They will also help you make a budget as well as teach you other financial skills that you will need to help you stay out of debt. Do you need do you need credit repair? If so, a credit counselor can help you with that as well. In some states, you are required to meet with a credit counselor before filing for bankruptcy. Learn more about it at this link here.

What Is Your Current Credit Situation?

What is your current credit score? If it is below 600, your score could go up if you file for bankruptcy. This is because accounts that are severely past due or in collections will be considered as settled when the bankruptcy is approved.

Consider The Aftermath Of A Bankruptcy

To a lender, there is a strong link between filing for bankruptcy and the inability to pay your debts in the future. Make sure that you ready to deal with the consequences of your decision after you make it. It could be a year or more before you are able to get a loan at a reasonable interest rate. If you are thinking about buying a home, you won't be able to get a mortgage for as many as two years after the bankruptcy.

You have to think carefully before filing for bankruptcy. In many cases, it is an opportunity only to reorganize your debt. Therefore, you cannot assume that your debts will vanish after you have your filing approved. If you have good credit, your first move should be to work with your creditors instead of going with the nuclear option first.

Guest writer : Annabelle smyth

email   : Annabellesmyth@gmail.com