Have you ever heard the phrase debt is money? How is it that the ultra-rich, like President Trump, have filed for bankruptcy and come out unscathed? If you’re wondering how to survive bankruptcy, then you’ve come to the right place. Keep reading to learn the top five bankruptcy secrets you need to know about before you file.
1. Prepare a Bankruptcy File
Bankruptcy is often reserved as a last resort. If you’re considering it, then you need to get organized immediately. Here’s what you should do:
- Start a bankruptcy file
- List out all your debts
- Find paperwork or documents to verify the debts
- Categorize your debts
This file is crucial for surviving bankruptcy. Categorizing your debts means distinguishing which debts can get cleared through bankruptcy. Student loans and child support, for example, rarely get cleared by the courts.
If you’re unsure about your debt type, then consider reaching out to an attorney for help.
2. Survive Bankruptcy Through Budgeting
You’ve likely heard it before, but now is the time to create and stick to a budget. When you’re swimming in debt, reaching the shore can seem impossible. Here’s how to survive:
- Calculate how much you earn each week
- Estimate your weekly expenses (groceries, electricity, rent)
- Pay your bills first before buying anything else
- Identify where you are overspending
- Consider less expensive alternatives (eating at home, cutting the cable)
- Use the 30-day rule to control impulse spending
Without budgeting, filing for bankruptcy may not help your financial situation at all.
3. Prepare for the Impacts of Bankruptcy
What happens when you file for bankruptcy? You need to prepare for the consequences of bankruptcy before you file. Here’s what to expect:
- Your bankruptcy filing will become public knowledge
- You may lose your property and assets
- Negative effects of bankruptcy on credit score
- Negative impacts for co-signers or those tied to you financially
The effects of bankruptcy often cast a wide net. Even getting a job after filing chapter 7 bankruptcy gets complicated. Potential employers may see your bankruptcy on your credit report.
4. Know You’re Not Alone
Filing for bankruptcy can make you feel isolated. Don’t fall into the trap of thinking you’re alone.
U.S. courtrooms handled over 12.8 million consumer bankruptcy cases from 2005-2017.
5. Turn Over a New Page
Often, filing for bankruptcy disrupts much more than just your finances. Creating a new budget will likely result in big lifestyle changes. Get prepared to roll with the flow and turn over a new page.
Consider adopting new (free) habits like jogging or hiking. Avoid places that encourage you to spend more money than you should.
One of the benefits of hiring a lawyer is normalizing your experience. A good lawyer will help you feel confident in your decision and help you moving forward.
Do You Need a Bankruptcy Attorney in California?
Are you struggling to survive bankruptcy? You’re not alone. An experienced bankruptcy attorney can help protect your assets and uphold your rights.