4 Factors yo Consider When You're Considering Bankruptcy

If you are considering filing for bankruptcy, you need to think carefully about if this is really the right choice for you to make. You want to make sure that you make the right financial choice that will benefit you now and in the long-term.

Bankruptcy Isn't Free

One of the most important things to realize is that bankruptcy isn't free. The bankruptcy cost has a price, and is not cheap. It is more than likely going to cost you a couple of thousand dollars to file for bankruptcy, which can be hard to manage if you are short on cash in the first place. You may have to borrow or save in order to be able to afford bankruptcy proceedings.

In some areas of the country, you may be able to find a local legal aid office that can help you out or a law firm that offers discounts to individuals who need assistance with bankruptcy. You can reach out to a firm that does pro bono work as well.

Do not pay someone who is not a lawyer to help you with your bankruptcy though. You want an attorney to guide the formal legal process. A financial advisor can help you manage your money so you don't end up in the same situation again, but a lawyer should be used for the legal side of things.

Bankruptcy Is Temporary

Next, it is important to realize that your bankruptcy filing is going to hang around for a while on your credit report. It doesn't magically make everything on your credit report better and your credit score is not going to rebound in a matter of a few months.

Anyone who looks at your credit report will see that you filed for bankruptcy for the next decade or so. That means that you may have to explain this choice any time that you apply for a loan or need financial assistance. It also means that people who look at your credit score are going to closely look at how you managed your money after you filed for bankruptcy, so be sure to stay on top of that if you want to file for bankruptcy.

Bankruptcy Doesn't Get Rid of All Debt

Finally, it is important to note that bankruptcy doesn't get rid of all debit. If you are behind on your income taxes, you have to be years behind to qualify for forgiveness. If you are only a few years behind, you are still going to owe that balance to the federal government.

If you have student loan debt that was backed by the federal government, you can't just get rid of that either. You may restrict and consolidate your student loans, and get assistance with better managing your payments, but your student loan debt will not be forgiven, unless you took out a private, non-student loan to go to school with.

Filing for bankruptcy can be helpful if you are struggling financially. However, it is important to remember that filing for bankruptcy is expensive and doesn't get rid of all your debt, and it will follow you for a while, so make sure it is the right choice for your situation before proceeding forward with the help of an attorney through firms like Molleur Law Office.