If you are one those who are some serious debt, you might be really tempted to think that filing for bankruptcy is your only way out of this sticky situation. You have probably heard from the news or from people you know that filing bankruptcy is a breeze and after the filing, you will be literally be freed from the debt you have incurred over the years.
Nobody will dispute the fact that filing for bankruptcy protection is a very easy process, one in which you can hire a bankruptcy lawyer to do, or if you are adventurous enough, you can do it yourself if you are not afraid to fill out tons and tons of paperwork. And who can forget the added benefit that bankruptcy judgment will free you from the debt that has been plaguing you for the last few years. Just like the old saying “there is no free lunch in this world”, once you have filed for bankruptcy, there are definitely consequences which you will need to face post bankruptcy process. It might seem to be the only logical solution for you, but you should really consider all the possibilities and consequences if you choose to file for bankruptcy protection.
Why Bankruptcy Is Not For You
If you have the funds to pay back the creditors, you should strongly consider paying back your debt and not file for bankruptcy protection. Your creditors should be willing to listen to you if you are looking to make a deal with them regarding your debt. Tell your creditors that you can pay them 50 cents on the dollar, hence cutting your debt obligation by 50%. You will want to portray a picture of desperation to the creditors. Tell them that you have limited funds and can only pay back a portion of the debt or else you will need to seek for bankruptcy shelter.
It is only natural for the creditors to want to get the entire amount back from the debtors. But in all honesty, in this kind of economic downturn, a lot of creditors will be “happy” just to get back 50% of the debt. You should already know how much you can afford to pay back the creditors prior to negotiations that you will be holding with your creditors. This is a negotiation, so do not be shy to tell them what you can and cannot afford. Start off by telling your creditors you can only pay back 50% of the outstanding debt. Do not get flustered if the negotiation drag on for days or weeks. It is a negotiation, and it can take time and patience.
Generally speaking if you can really afford to pay back your debt, you should do that to avoid having to file for bankruptcy protection. You want to avoid having the record that you have filed for bankruptcy protection because it will stay in you credit history for up to 10 years. Once you have filed for bankruptcy protection, your credit score and credit history will inevitably suffer as part of the consequence. It is true that you can mend your credit history and credit score, but it is a long and tedious task which require a lot of time and dedication.
Personal Bankruptcy Is For Some People
If it will take you 5-7 years to pay back the creditors, I would strongly consider that you should be filing for bankruptcy shelter. If it will take you that long a time to pay back the creditors, there is a good chance that your credit is already ruined. If that is the case that your credit report and credit history is inevitably damaged, why not save yourself the headache, and money of course, and file for bankruptcy. Since you will need to find a way to fix your credit, and you can “save” the money that you are planning to use to payback the creditors, it will turn out to be a “win-win” situation for you if you are in such dire financial situation.
As part of the bankruptcy process, the creditors cannot harass you any longer when the process has begin. This is set in stone by law that the creditors cannot contact you directly once you have chosen to seek for bankruptcy shelter. Once the bankruptcy court discharges all your debt, it legally means that you have become debt free from the creditors that previously were seeking for repayment of the debt. These creditors will no longer have any legal rights to seek for payment. This is truly the only way you can become debt free if you really have that much debt you are responsible for.
Is Personal Bankruptcy For Me?
We have pointed out some benefits and disadvantages for filing bankruptcy, so what should you do at this point? It is not a secret that filing for bankruptcy can eliminate the debt you have been carrying. Filing for bankruptcy is not for everyone and definitely does not fit every single situation. Instead of beating yourself up over this decision to file or not file, talk to a bankruptcy lawyer who can lay out all the facts related to your particular situation. Filing bankruptcy is a life changing event and should never be taken lightly. If you choose to seek the advice of a bankruptcy lawyer, please note that most bankruptcy lawyer provides free initial consultation. You have nothing to lose by talking to a bankruptcy lawyer to find out what you will be experiencing whether you are in the pre bankruptcy phase, or the post bankruptcy stage.