the Last Resort:
What to Do If You’re Considering Bankruptcy
Filing for bankruptcy is an extreme
move, not a quick fix. It’s a long, painful process with a huge
stigma, and you’re unlikely to be able to get any kind of credit for
ten years afterwards. Yet bankruptcies are on the rise. Out of ignorance
or stupidity, more and more people seem to be using bankruptcy as a
first option, instead of a last resort. Before you do it, make sure you’ve
considered every alternative.
Reorganized Your Debt?
If you haven’t tried debt
consolidation or negotiation, you really should. Yes, you’ll have to
pay back your debts eventually, but surely that’s better than
bankruptcy, isn’t it?
Everything You Can.
It’s better to sell everything you
own than it is to go into bankruptcy. Move to a smaller house. Sell your
cars and take the bus. Take a good, hard look at your life, and realize
that there are very few true ‘basics’: you can do without almost
Your house is probably full of quite
valuable things that you never use, so bite the bullet and get rid of
them. In short, subtract your debt payments from your income, and live
like someone who earns that much.
You are going to lose almost
everything you own if you declare bankruptcy, so you might as well try
to sell it yourself at a better price and avoid the bankruptcy issue
If you can get extra hours, do it.
Being bankrupt is such an indignity that you should at least try going
to your boss and asking for a pay rise or promotion. After all, the
worst they can do is say no. They’re going to find out about it anyway
if you declare bankruptcy, and they might wonder why you didn’t come
and ask for their help.
Also, if you’re married and only
one of you works, try to get the other a job - you never know, it might
even be fun!
Power of Threats.
One of the best things to do when you’re
considering bankruptcy is to write a letter to absolutely everyone you
owe money to, letting them know.
Make it a very clear threat: “if I
cannot find a way of paying my debts then I will be forced to file for
bankruptcy”. Most creditors would rather let you pay back a tiny
fraction of what you owe than have to try to get money out of a
Bankruptcy laws vary enormously
depending on where you are. There are some places where you’ll be
forced to give up everything you own to pay your creditors, some places
where you at least get to keep your house, and some where you can
declare yourself bankrupt and not even notice!
Try to get a lawyer - you might think
that you can’t afford one, but many will work ‘pro bono’ (for
free) for people who really need a lawyer but can’t pay.