The bankruptcy process can give you a new start, but it’s the best option for everyone. Before you file, consider the extent of your debts and your long-term financial goals. Alternative options often result in more manageable outcomes, and you can keep your credit in good standing.
Negotiating with creditors and reducing expenses are great ways to avoid bankruptcy. This strategy should be executed before you file and requires careful budgeting and financial planning. If you are able to cut your expenses or negotiate a lower interest rate the savings can be used to pay down your debt.
Selling assets is a way to lessen your debt burden. This will allow you to pay your debts off and may even prevent you from applying for Chapter 7 bankruptcy. Before selling your assets you should speak with a bankruptcy attorney to confirm that you qualify for this type of relief.
In bankruptcy the court will wipe out or “discharge” the majority of unsecured debt including credit card debts medical bills, past due utility bills, and personal loans. Some debts will survive bankruptcy, such as student loans, recent tax payments as well as child support, alimony and tax-free income. Before filing for bankruptcy, it’s a good idea to erase non-priority debts and then use any savings you can make on more expensive debts that cannot be eliminated by bankruptcy.