When you are in significant financial difficulties, it's only natural to consider filing for bankruptcy. After all, bankruptcy wipes out your debt and offers a fresh start. Unfortunately, having a bankruptcy on your record has some seriously negative consequences, such as destroying your credit rating. Depending on your circumstances, other choices could be more appropriate. Here are several important options to think about.
If the main reason you are considering bankruptcy is to protect yourself from overly aggressive or harassing creditors, then it's vital to understand that the law is on your side. The Fair Debt Collections Practices Act makes it illegal for creditors to engage in certain acts, such as calling too often, making threats, or saying you will be jailed if you do not pay your debt.
This law also lets you stop any creditors from contacting you against your wishes. You just send the collectors a letter saying you want them to leave you alone. If they do not follow the law and keep up their aggressive actions, then you should file a complaint with the Federal Trade Commission, who will address the situation.
Being behind the financial eight ball is extremely stressful, and it's practically impossible to make good decisions in such circumstances without expert advice. Before making any decision to file for bankruptcy, getting advice from a debt counselor is prudent. In many instances, the counselor can help you avoid filing by showing you how to negotiate effectively with your creditors. They may even negotiate on your behalf if you do not feel comfortable dealing with the creditors directly. These negotiations will typically result in giving you more time to pay, or the creditors could accept a partial payment instead of the full payment.
If you financial situation is so dire that you have very few assets or resources, then it could make sense to simply avoid doing anything. People with few assets are rarely worth the time and expense it would require to take them to court. They are referred to as being "judgment proof, " because they have no property to turn over to a debt collector even if a court judgment is rendered against them. One option is to simply write your creditors and tell them you are judgment proof and that pursuing you in court is pointless. However, you may still have to offer smaller assets even if you meet judgement proof standards.
The decision to file for bankruptcy is not one to be taken lightly or without expert advice. Consult a bankruptcy attorney, like Greg Dunn Bankruptcy Attorney, for more help.