5 Questions To Ask When Considering Bankruptcy
If you’re struggling with rising debt, at some point you may have thought about filing for bankruptcy. Before you do, here are five key questions you should ask yourself.
- What is the total amount of debt that I have?
- How much of my income could be used to repay debt?
- What are my assets?
- Is there anything special about the debts?
- Have you explored alternatives?
Calculate all of your outstanding debt – whether it’s for utilities, credit card companies or assets you have regularly schedule payments for. Don’t forget about personal debt as well – if a friend or family member lent you money, write it down. Putting down all of your debts on paper is always the best way to identify how much debt you actually owe and whether you have a rising debt problem.
Create a budget! Doing so is the easiest and the best way to know where your money is being spent and how much you have left after paying all expenses. By sticking to a budget, you may be able to correct your rising debt challenges by spending your money on things you need, instead of things you simply want.
Jot down a list of your assets, with the actual present value for each. This will give you an indication as to items that could be sold or where money could be borrowed against an asset. For example, you could remortgage your house or get a second mortgage to help pay off your debts, often at a lower interest rate.
Did anybody co-sign for a loan? Does your husband or wife have a second credit card under the same account? Look at each debt on your list and write down any other information that could help you get a clear picture of your rising debt situation.
There are always alternatives that need to be explored before filing for bankruptcy. Did you see your bank about the possibility of a consolidated loan or remortgaging your house? If you have special circumstances that could prevent you from filing for bankruptcy, they are always worth taking a look at.
If you’ve asked yourself these five questions and explored options to manage your rising debt, but still aren’t sure how to proceed, consider speaking with one of MNP’s Trustees. We offer free, no-obligation initial consultations to walk you through your options and determine whether bankruptcy is truly the best option for resolving your debt.
