The decision to declare bankruptcy is one that you should never take lightly. Done right, bankruptcy can give you a fresh start by either writing off your debts or allowing you to work out a repayment plan that suits your current financial situation. If you get it wrong, however, bankruptcy can turn an already difficult situation into a nightmare.
Of course, to err is human. However, not all mistakes are created equal, and bankruptcy mistakes can be particularly costly. Here are the top two mistakes you want to steer clear of while declaring bankruptcy:
Taking too long to begin the process
Things can snowball out of control real quick if you are unable to pay your debts. Your creditors might involve debt recovery agencies, which might lead to wage garnishment or property repossession.
All these can worsen your financial situation, which is why you should never let them happen. As soon as it is apparent that you are behind on your debt repayment, you need to start exploring your options. And this might include seeking debt relief, renegotiating with your creditors or, if both options are off the table, declaring bankruptcy.
Filing the wrong type of bankruptcy
There are basically two types of bankruptcies for those who are struggling with consumer debts: Chapter 7 and Chapter 13 bankruptcies. The type of bankruptcy you can file depends on your personal circumstances and the nature of the debt you are hoping to discharge.
For instance, if you have just lost your job or are on low income and with no assets, then Chapter 7 bankruptcy may make sense when discharging unsecured debts. However, if you are struggling with mortgage payments or other secured debts, then Chapter 13 bankruptcy might give you the lifeline you need to reorganize your repayment plan.
Bankruptcy can be a welcome relief when you are drowning in debt. Find out how you can avoid costly mistakes while declaring bankruptcy in Indiana.
