If your debt has spiraled out of control, and there is no end in sight, it might be time to file for bankruptcy. Bankruptcy will get you out from under stifling debt and give you room to breathe. Here are four tips that will help you prepare for the process.
1. Know What You Owe
Before you file for bankruptcy, make sure you know exactly what you owe. Once you file the paperwork, you'll have a hard time adding new information to the list of creditors. Unfortunately, any debts that you forget to list on your paperwork will remain collectable debt once your bankruptcy is discharged. That means creditors will continue to hound you for those outstanding debts. As soon as you know that bankruptcy is a serious option, begin making a list of all your debts. Save all the bills that come to your house, and get a copy of your most recent credit report.
2. Try to Make Payment Arrangements
If your debts haven't been charged off yet, there may still be a chance to enter into payment arrangements with some of your creditors. Prior to filing for bankruptcy, talk to your creditors and try to come to an agreement that works for all of you. Let your creditors know that you'll be filing for bankruptcy if an agreement can't be reached. Some creditors will be willing to offer reduced payments once they realize that bankruptcy is a possibility.
3. Avoid Taking on New Debt
As soon as you know that you'll be filing for bankruptcy, stop taking on new debt, including secured credit cards. You may think that this is a good way to start cleaning up your credit, but it could end up causing more problems in the long run. Wait until your bankruptcy is discharged to start working on the credit cleanup. Once all your debt has been forgiven, you can start applying for new lines of credit.
4. Work With a Bankruptcy Attorney
If you're going to be filing for bankruptcy protection, make sure you work with a bankruptcy attorney. Filing for bankruptcy is a confusing and lengthy process. Even a simple mistake can end up costing you dearly. In fact, mistakes on your bankruptcy filing could cause your entire case to be rejected. Hire an attorney to help you avoid those mistakes.
Don't take chances with your financial future. If you need to file for bankruptcy protection so you can get out of debt, use the tips provided here to help you avoid costly mistakes. Contact a company like Phoenix Law for more information.