No one ever wants to think that they may have to declare bankruptcy, but it’s there for a reason and sometimes, it really is your best bet. The idea behind bankruptcy is that the government recognizes that sometimes you’ve painted yourself into a corner. Instead of making things worse, you’re allowed a clean slate, so long as you declare bankruptcy and deal with the ramifications. That being said, bankruptcy has long term consequences, so you shouldn’t go declaring it until you absolutely have to.
Are any of the following realities for you at the moment?
- Bill collectors are calling you.
- You only make the minimum payments on your credit cards.
- You use credit cards to purchase necessities.
- You’ve considered debt consolidation .
- You don’t know how much you really owe.
- Just the thought of going through your finances is enough to make you feel anxious or scared.
If two or more of those sounded familiar, you definitely want to start thinking about how bad your finances are. Although it can be difficult to sit down and do, it’s time to untangle your finances and find out where you stand.
To do this, you must take an inventory of your liquid assets. This includes everything, so don’t leave out any bonds, stocks, retirement funds, saving accounts, real estate, college savings, vehicles, etc.
When you have that done, it’s time to compare their value against how much you owe. Take all your debt, add it up and see what’s more: what you owe or what you have.
Even if you have more debt than assets, it may not be time to declare bankruptcy quite yet. Speak to a financial professional first or even a lawyer. They’ll help you see the reality of your current situation and explain to you what bankruptcy will entail.
No matter what, bankruptcy should never be a decision made lightly. Consider the above before you make it official.