Bankruptcy is a loaded word: while it strictly refers to a process an individual undertakes in order to pay outstanding debt, it is often seen as a reason for shame and a sign of inability. Many people who are considering filing for bankruptcy hide their problems from their friends, family and community because of this, and often resort to extreme decisions to avoid having to file.
However, bankruptcy is far more common than you might think: in 2001, there were over 56,000 filings for bankruptcy in Michigan alone. Statistics also show that people filing bankruptcy are scattered across the social spectrum: more than 27% of people who file hold at least a bachelor’s degree, and real estate mogul Donald Trump has filed for bankruptcy four times.
So, if you’re looking for information on filing bankruptcy, are wondering about the benefits of filing bankruptcy, or are considering contacting a firm of bankruptcy lawyers, don’t worry, you’re not alone! Read on for our tips on managing your money and filing for bankruptcy.
First, know what type of bankruptcy you’ll be filing.
If you’re in debt and wondering “should I file for bankruptcy?”, you should first consider your situation: is your debt personal or related to a professional venture? Do you have credit card debt, mortgage problems, or trouble with loans? Your answers to these and other questions can determine what type of bankruptcy you’ll be filing for. One common option, Chapter 7 bankruptcy, involves turning some of the filer’s property over to an appointed trustee and selling it to pay the outstanding debt. Another common option is Chapter 13 bankruptcy, which is aimed at debtors with less than $1,081,400 in unsecured debt (such as credit card debt), and/or secured debts of less than $360,475 (such as real estate or car loans). If you’re feeling overwhelmed, contacting bankruptcy lawyers might be the best option to help you decide how and what to file.
Second, make at least the minimum payments on your debt for as long as possible.
This is a common piece of advice, but worth repeating: even if you are considering filing bankruptcy, making at least the minimal payments for as long as you are able will buy you some time. Missing payments, however, will only add to your stress and your financial burden.
Third, aim for stability.
People find themselves in debt for a number of reasons, many of them legitimate: student loans, mortgages, and unemployment, all necessary or unavoidable common situations, can cause the average person to fall into debt. However, regardless of your financial habits, this is the time for you to learn to improve your financial habits and excise any unnecessary spending. Think frugally: you don’t need to spend to compete with your friends and family, only to take care of yourself. In our consumer-driven society, the lessons you learn while filing for bankruptcy can improve your life for years to come.
Fourth, consider hiring bankruptcy lawyers.
It’s been mentioned already, but having someone who knows the ins and outs of the process can help mitigate a highly stressful and confusing situation.
Fifth, remember that there is life after bankruptcy.
Bankruptcy can seem like the end of the world, but remember, it is far more common than it seems, and many people emerge from the process as stronger, wiser, and more financially-savvy people. As will you.
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