Friday, October 1, 2010, AM | 4 Comments
It used to be a big shame to file for bankruptcy. You couldn’t even get out of the house for days lest your neighbors would point a finger at you. You would keep your head lower if you were brave enough to get out and walk in the neighborhood. These days it is still a big decision to file for bankruptcy but luckily for your finances and unluckily for your ego, there is no shame or taboo attached with it. Tens of thousands of folks do it almost every day. Now most folks keep their heads up and almost be proud of it as if something good has happened in their financial life.
Reasons for going into bankruptcy…
The reasons to go into bankruptcy can be as complex as when you lose your job, lose your house, eventually followed by losing your sanity. Or it can be as simple as going on a shopping spree without thinking about your finances whether you would be able to pay the full amount when you get your next credit card bill or perhaps in the next ten years or more. You just charge it as if you have inherited the money and now it belongs to you. Well – it does not. You are renting the money. Morally and legally you are bound to return it and the sooner the better.
When worse comes worst and you file for bankruptcy, it can allow you to start fresh and regain control of your financial life. Experts tell us the reason for filing bankruptcy can be any of the following:
- Medical bills,
- Lost job,
- Your never-ending shopping spree,
- Some other life-changing events.
Consequences of bankruptcy…
In any case, filing for bankruptcy is a big decision that should not be taken lightly and as if it is your birth right or may be it is. It can impact your financial future for years to come. And the reason is quite obvious. You have become, in the eyes of lending institutions, financial outcast, untrustworthy. It will take you years – some say at least 7 years – to get your credit score high again if it was ever high. When that happens, you would then be able to get a loan on favorable interest rate that you can live with and can become your financial livelihood.
Before you file for bankruptcy…
Financial experts suggest you go through all your assets, income and liabilities and if you are in the red and I mean way down in the red, and you don’t see light at the end of your financial tunnel, then go ahead file for bankruptcy. Follow the procedure below:
- Add up your debt – everything. That’s your liability.
- Add up your assets and income.
- Your income alone may not cover your entire debt. What if you sell some or all of your assets? Would that bring your debt under control?
- Would a debt consolidation loan help?
- Seek professional assistance.
- A bankruptcy attorney can explain what is allowed in your state.
- Some debts cannot be eliminated by bankruptcy. For example child support and student loans.
- Decide if it’s you alone or your partner as well.
- It varies from state to state whether you can keep something with you, so understand what is allowed in your area.
In a Nutshell
You should be morally and ethically somewhat in the clear – in your own mind – if your financial life has come to the point of filing for bankruptcy if and only it is because of losing job, losing your house and losing your sanity. Those are external events brought onto you by the current lousy economy.
If it is entirely because of your reckless spending spree and without any respect for the almighty dollar, then we all pray for you. May you financially RIP. “We are all lying in the gutter, but some of us are [not] looking at the stars.” – Oscar Wilde.Facebook.com/doable.finance