How to Tell If Bankruptcy is For You |
Posted: April 28, 2023 |
Bankruptcy may feel like the ultimate solution for some people, but it should be considered only as a last resort. It can have serious financial and credit consequences that take years to recover from. There are many ways to reduce your debt and avoid filing for bankruptcy. These include negotiating with your creditors and a complete budget revamp. You’re living beyond your means When you’re living beyond your means, you’re putting yourself at risk for bankruptcy and other debt problems. However, there are steps you can take to improve your financial situation and avoid a bankruptcy filing. One of the first things you can do is make sure you are spending less than you earn. By making a conscious effort to spend less than you make, you can save more money and pay down your debts faster. Keeping track of your expenses can be challenging, but it’s a necessary skill for anyone who wants to manage their finances successfully. A good budget can help you make smart spending choices that will keep your bank account healthy and your goals on track. If you find yourself relying on credit cards to pay for purchases, it’s a sign that you are living beyond your means. Instead, try to shop for your needs with cash, and use credit sparingly. This will help you avoid credit card debt and prevent a bankruptcy filing. You’re facing foreclosure If you’ve fallen behind on your mortgage and are facing foreclosure, filing bankruptcy may be an option. However, you must first consult an experienced bankruptcy attorney to determine whether this is the best choice for your situation. A Harrisburg bankruptcy attorney can help you with that determination. If you decide to file for bankruptcy, your lender will stop all collection efforts — including foreclosure — until your case concludes. You might be able to live in your home while you wait, which can help build up savings and give you time to make up missed mortgage payments. You may also be able to keep your home by filing a Chapter 13 bankruptcy, which allows you to reorganize your debt and put it on a 3-5 year repayment plan. This postpones your foreclosure for the duration of your plan, but you must have enough income to make up past-due mortgage payments. You’re being harassed by bill collectors If you’re being harassed by bill collectors, bankruptcy could be your best option. Bankruptcy can help stop debt collection harassment and give you a fresh financial start. Creditors are obligated to follow federal laws that govern how they can contact you and your right to dispute a debt. The Fair Debt Collection Practices Act (FDCPA) is a set of rules that protect you from abusive behavior by debt collectors. Your first step should be to write a letter to the creditor asking them to stop calling you. Make sure to include a description of the harassment, the date and time of the calls and a statement that you do not want any more harassment from them in the future. If the creditor still refuses to stop, then you can file a complaint with your state’s Consumer Protection Bureau or Federal Trade Commission. These agencies will investigate the debt collector’s actions. If the agency is found to be in violation of the law, it will have to stop contacting you. You’re losing your job Job loss is one of the most stressful events that can happen in a person’s life. It can cause fear, anxiety, depression, resentment and anger. It’s natural to feel all of these emotions, but it’s also important to treat yourself with kindness. Give yourself time to process the news and take some deep breaths. Afterward, consider where you’d like to go next. Think about what type of work you enjoy doing and whether you can find a job that pays what you need. In the long term, a career change is often a good thing. It can help you grow professionally and give you the opportunity to build new skills or find a work/life balance that you enjoy more than before. It’s important to talk to your spouse about your job loss and how it’s affecting your family. Keeping it a secret will only make the situation worse.
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