Imagine working the same job in Shreveport for over 15 years. You have a steady income you can depend on to pay for your home, the monthly bills and even take a decent vacation once a year. But, when a new management team came in, they started making cuts. Some people were laid off while others saw a sudden decrease in pay. Six months later and you have run through your savings, maxed out your credit cards and you are in danger of losing your car and your home.
Many people find themselves in a similar situation when there is an unexpected loss of income or a sudden increase in expenses. Situations like these often lead to high levels of debt that many people cannot keep up with. If you are one of these people, there are options available, such as bankruptcy. If you are considering bankruptcy, read further for some tips to help you prepare.
Do a full assessment
No matter the reason that your debt became overwhelming, you should take the time to completely assess your finances. This includes accounting for all of your income and expenses. For some people, this might identify bad spending habits that they can correct to avoid a similar situation in the future.
Check your credit report
There are various sources that will provide you with a free copy of your credit report. Obtain one as soon as possible and use it to identify all the creditors to whom you owe money. You may even find that some of the debt listed is not yours, either due to identity theft or a mistake.
Notify the creditors
When you file bankruptcy, you might be able to obtain an automatic stay from the court that will keep collection agents and creditors from suing you for any outstanding debt. Bankruptcy will also make it illegal for creditors to keep calling or sending letters demanding payment. When you file, be sure to contact your creditors as soon as possible to inform them of the situation.
Attend credit counseling
As part of your bankruptcy filing, you will probably have to attend an approved credit counseling program. Do not put this off until the last minute. Instead, get it done as soon as possible so that it does not cause any delays in the filing process.
If you think you should declare bankruptcy, the above tips can help you prepare. While many people consider bankruptcy as a sign of failure, it is actually a tool to help people restructure debt and get their finances under control.