The short answer is Yes.
The first thing you should do before filing for bankruptcy is contact all the people you owe money to and see if there is a way that you can work out a repayment schedule. You might be surprised how cooperative creditors might be if you call and show interest in paying back the debt. You can also mention that you’re thinking about filing for bankruptcy if you can’t find a way to pay back your debts. This often makes creditors much more willing to work with you because they know that if your bankruptcy is granted, they’ll never have their money paid back to them.
If you don’t feel comfortable contacting and negotiating with creditors yourself, you can hire a non-profit credit counseling service to do this for you. This service will contact everyone for you, and they’ll also work with you to help you repay your debts. While they may not offer a loan to help you pay them off, they will help you create a plan that works for you and is reasonable and that will help you repay your debts in a timely manner. These professionals can also give you inside tips on how creditors, banks, bankruptcy, and loans work so you can have a better idea of which options are best for you.
After you call your creditors you might then want to consider calling a lender for a debt consolidation loan. These loans are available from banks or private debt consolidation lenders. With this type of loan, the lender will consolidate all of your debts into one amount. They will then pay back all of your creditors and you will have a loan outstanding with them to pay back the full amount paid. Debt consolidation loans can often come with reasonable and affordable repayment plans and can be a great alternative to bankruptcy. It’s important to know that these loans come with interest rates attached and they vary greatly from lender to lender.
Using a credit counseling or debt counseling program is often compared to a Chapter 13 bankruptcy, because it allows you to create a repayment plan to repay your debts. However, using a credit counseling program doesn’t affect your credit negatively in the same way that filing a Chapter 13 does. However with a Chapter 13, creditors are very limited in the collections actions they can take should you miss a payment. When using a debt counseling program, creditors can start collections actions as soon as you miss one payment, putting you right back where you started. Also, if you use a debt counseling or credit counseling program, you’ll be required to pay back the full amount of your outstanding debt. Often if you file for Chapter 13 bankruptcy, the amount you’ll need to repay is a much smaller amount than what is actually outstanding.
Surprisingly, one of the best things to do when you’re facing extreme financial difficulty is to do nothing. That debt will eventually be written off by creditors, and it will eventually be wiped from your credit history – although this is likely to take as long as having a bankruptcy claim on your report will.
By the time most people are at the point of considering bankruptcy, they have no assets left to lose. It’s very easy for creditors to find out that someone has no assets and so, they’ll see that litigation against you is not worth it simply because they have nothing to gain by suing you. Doing nothing will take a very long time in itself and like bankruptcy, should only be considered as a last resort.
It’s bankruptcy that we’re talking about and so, money is in short supply. Because of this, when many people first start considering bankruptcy as a viable option for themselves, they often consider if they can file themselves, rather than hire a bankruptcy lawyer. This might seem like a great way to save even more money and it’s entirely possible to file yourself, there are plenty of good reasons why you shouldn’t.
Once you file for bankruptcy, you should contact your creditors and let them know that you’ve done so. After this, whether you’ve already hired a bankruptcy lawyer or not, collections agencies and other creditors may still contact you and harass you for their money. Some even up the ante at this point because they know it’s only a matter of time before you’ll no longer be legally obligated for those debts. But, if you hire a bankruptcy lawyer, you can tell them they may only contact you through your lawyer. After that, if creditors want to contact you they are only legally permitted to call your lawyer and ask your lawyer to tell you to contact them.
Hiring a bankruptcy lawyer will also give you much more information that you’d have available to you filing on your own. There are a lot of steps involved in filing for bankruptcy. You have to speak to the courts, the trustees who review your case, and your current creditors. You can research all of the steps and how to complete them on your own, but a bankruptcy lawyer will take care of all of that for you. They will let you know in plain English what you need to do and when, and that everything is on track.
More than that, bankruptcy lawyers will also be able to fill you in on things that you may not find when doing research on your own. For instance, you may want to file for bankruptcy because you have a very large debt from 15 years ago that you simply can’t pay off. While you will be able to find out how to file for bankruptcy yourself, a bankruptcy lawyer will tell you that the statute of limitations has run out on that debt, and so you’re no longer legally responsible for it anyway. Without hiring a lawyer, you would have gone bankrupt when you didn’t have to!
A bankruptcy lawyer will not only be able to tell you the things you should be doing, but also the things that you shouldn’t. If you make a mistake when filing for bankruptcy, your case could be dropped by the courts and you may be forced to start the entire process over again. Even the slightest error could cause a major delay when filing for bankruptcy. And when you’re waiting for your debts to be erased and creditors keep calling, time is of the essence! A bankruptcy lawyer will ensure that there are no mistakes when your bankruptcy claim is filed, and so it will be granted that much faster, putting you on the road to financial well-being even quicker.
Even though bankruptcy lawyers make their money from people going bankrupt, they still don’t like to see it happen to people --- I promise, we don't and were here to help! That's why we also offer consultation services when it comes to finding alternatives to bankruptcy. Many alternatives to bankruptcy are out there, and some of them might be better for you now and in the future when it comes to your finances. A bankruptcy lawyer will clearly outline all of these alternatives with you and go over them in detail to see if any of them will work for you.
Federal Judge Speaks on Misconceptions About Bankruptcy
One percent of the Mississippi population, nearly 30,000 people, has an active bankruptcy which some experts say is a high number.
Chief U.S. Bankruptcy Judge for northern Mississippi Jason Woodard talked to Columbus Rotarians Tuesday afternoon. Judge Woodard says there are misconceptions about bankruptcy and it is often times necessary.
He says bankruptcy filings are down right now and are beginning to level off. He says many people have this misconception that those who file are financially irresponsible.
“A lot of times it’s driven by market forces, it’s driven by divorce or illness or a job loss," Judge Woodard said. "So part of what we talked about today is what bankruptcy is and why it’s necessary for some many people especially here in Mississippi, the poorest state in the union.”