Bankruptcy can be a scary term. We realize that it can feel daunting, scary, and overwhelming. It can feel this way because so many people don’t know anything about it. We focus on what we hear in the movies, which of course is always dramatized. 

What is Bankruptcy?  

Bankruptcy is a legal process where consumers and businesses may petition the court to release them from the liability of their debts. In most cases the request is granted, but may involve some other actions to attempt to cover the amount owed. Bankruptcy can be a lifeline for people who are simply drowning in debt and don’t know where to turn. 

If you’re considering bankruptcy here are things you need to do and know:

1. Explore all of your options. Don’t just assume that bankruptcy is your only option. Do your research and talk to a debt management company to find out if you qualify for any other debt management programs like debt settlement, debt consolidation, or other counseling. If you do, these may be more desirable options compared to bankruptcy. 
2. Decide if you’re in too deep. If it is going to take more than five years for you to pay off all your debts, it might be time to declare bankruptcy. You need to have a good, hard look at your situation and be honest with yourself about what you can pay off and what you can’t. 
3. Hire an attorney. Regardless of which type of bankruptcy you file for, the best advice we can give is to plan to talk to an attorney. The last thing you want is to miss something important because you aren’t up to date on the legal information or the process. A bankruptcy attorney is crucial to help you navigate the process.
4. Get organized. If you are considering filing for bankruptcy, start getting your files organized and ready to go. Your attorney is going to be asking you lots of questions and it will make your life easier if you have your information as streamlined as possible. 
5. Get in a good mental state. Any type of debt management is going to be stressful. If you know you’re going down this road, prepare yourself mentally for the emotional stress you will probably experience. Whether it’s just sleepless nights or the reality of having to sell your home or assets to help pay down debt, bankruptcy can put a huge strain on your emotional well-being. Getting into a healthy frame of mind is crucial to manage this process well. 
6. Be prepared to build back up. Bankruptcy isn’t the end of the story. Thank goodness! In fact, the clean slate could be just what you need to get your financial health going in the right direction. Yes, you may have to rebuild credit, savings, and new financial habits, but we’re here to tell you that it’s worth every bit of effort! 

There are multiple types of bankruptcy and multiple options when it comes to paying down large amounts of debt. You probably have lots of questions and honestly, each situation is different. That’s why it’s important to talk to experts who can help you assess your own situation and help you understand your personal options. At DebtQuest USA, we’re here to help and we’d love to talk to you and help you decide if bankruptcy is the right choice for you!