Category Archives: Bankruptcy

In Over Your Head? How To Know if Bankruptcy is The Right Decision

Having a large amount of debt can easily consume your life and make it difficult to function. If your debts are overwhelming, you might be considering bankruptcy. But how do you know when it is the right course of action? Bankruptcy is a wise choice in some situations, but it can make the problem even worse in other situations and knowing when it is necessary is crucial. These tips will help you decide whether or not bankruptcy is a good fit for your financial situation.

 

Compile Your Information 

 

It is scary to add up the numbers, but you cannot make an accurate determination about bankruptcy if you are not sure exactly what you owe. When people are in debt, many of them are also in denial.

When you are considering bankruptcy, take the time to compile information about each debt. You should list the outstanding balance, the company name and the interest rate for each debt.

 Compiling your debts will help you realize how much you really owe, and it will also shed some light regarding the types of debt that you have accumulated. For instance, if over half of your debt is student loan debt, bankruptcy might not be the best option since this type of debt is not forgiven with a bankruptcy.

 

Seek Professional Counsel 

 

There are different types of bankruptcies available, and understanding all of the different options can be complicated. Therefore, it is very beneficial to seek professional counsel like that which is offered at Paddon & Yorke Inc., a Toronto bankruptcy trustee, when you are considering bankruptcy. Many bankruptcy attorneys offer a complimentary consultation at no charge. You can meet with the attorney, explain your situation and get advice regarding whether or not bankruptcy is a good fit for you. If you are ever in doubt this is a great way to resolve your concerns.

 

Change Your Money Habits 

 

Bankruptcy discharges many of your debts, but it will not change your money habits. Before you agree to a bankruptcy, it is vital to take control of your finances. Sadly, many people who file bankruptcy eventually go on to file a second bankruptcy because they did not change anything about their spending habits. A bankruptcy can be a step on the road to financial success if you use the time to formulate a budget and develop a healthy mindset about money. If you need assistance, try talking to a financial counselor, reading personal finance books from the library or trying out an online budgeting program.

 

There are numerous questions to consider before you file for bankruptcy. Make sure that you take the time to research all of your options before you decide whether or not bankruptcy is right for you and your family.

What to do after Bankruptcy

Bankruptcy is one of the most significant events in life, comparable with marriage or divorce in its impact. However, unlike those two events bankruptcy is almost always a sign of bad times.

To make sure that the bad times are a thing of the past and you do not repeat the same mistakes that led to the bankruptcy in the first place, we have collected this handy guide to what to do after bankruptcy. Even a divorce may be a favorable event if it is done amicably, but a bankruptcy inherently means that you have fumbled financially; therefore it is a good time to make a new start using the following tips.

Assess your Credit Report and Finances

The first step to better financial management after declaring bankruptcy is to educate yourself about not just finance, but also about your own finances. You should read your credit card reports, as well as bank reports, to find out where you spend your money and what your sources of income are. Once you know more about your spending habits, you can take steps to change them for the better.

Learn to Live within your Means

Maybe you have done that always, but a bankruptcy should be taken as another chance to start living within your means. Make sure that you change your spending habits so that you cut back on all unnecessary expenses. When you are in this phase, it is a good time to learn about the differences between liabilities and assets. Any product or service, such as cable or mobile phone is a liability in the long run, whereas the vehicle that allows you to go to work is an asset. You should acquire assets, and try to reduce liabilities.

Pay Your Bills on Time

By paying your bills on time, you not only develop financial discipline, but also improve your credit score. If you find that your bills are too high or too many for your means, you should cut back on some of the services to reduce them. For example, if you have monthly subscription to entertainment or other services, you can unsubscribe till the time your finances are better.

Repair your Credit Worthiness

By declaring bankruptcy, you have definitely taken a huge blow to your credit worthiness. However, it is perfectly possible to repair your credit worthiness by using your credit card wisely. Paying bills on time is also a part of the process of improving your credit score. For a while, you will find that you can only get loans, such as car loans, at a higher interest rate. However, once you have paid them in full and on time, your credit score will improve and you should be able to access loans at a lower interest rate.

When you are recovering from bankruptcy, you are likely also recovering from a number of bad financial habits. Therefore, bankruptcy should be taken as an opportunity to change those habits, as well as to improve your credit score. Once you r credit score has improved, and you have successfully paid off all your debt, you can definitely call yourself a bankruptcy survivor.

 

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