If you are at a point in your life financially where you need extra help to get out of debt, you may be considering bankruptcy. Bankruptcy should be used as a last resort, after you've already exhausted all of your other means to get out of debt. If you've gone through all of your means and you still can't seem to get out of debt, bankruptcy may be the answer for you. Before you file for bankruptcy, there are a few steps you should take. Read on for these steps.
1. Assess Your Debt-To-Income Ratio
You need to figure out your debt-to-income ratio to see exactly where you stand with your debt. The bankruptcy trustee will take a look at this as well, so you need to be sure you are actually in need of filing for bankruptcy. Make a list of all of your debts and add them up for the month. Then add up your income for the month — all of your sources of income. If your monthly debt payments are more than your income, or nearly as much as your monthly income, you have a high debt-to-income ratio, which would indicate that bankruptcy is the right option for you. If your debt-to-income ratio is low, you may have the means to get out of debt — you simply need to budget your money a little better.
2. Gather All Of Your Creditor Information
You need to gather all of your creditor information, as you will need this when you file for bankruptcy. Get all of your debts in order, including monthly utility bills. Keep track of what is owed, as well as the name, address, phone number, and what the debt is for. All of this information will be needed when you fill out your bankruptcy packet when you file for bankruptcy. It's how the bankruptcy trustee lets your creditors know about your bankruptcy and that they are included in the bankruptcy. Be sure you have all of the information you need and include all of your debts.
3. Take A Class On Budgeting
To help you after you file for bankruptcy so that you don't end up in trouble again with your debt, you should take a course on budgeting. A course such as this can help you better understand how to budget and how to save your money as well. A local college may offer this type of course. It's worth it if it will help prevent you from going down the same path and getting into debt again even after filing for bankruptcy.
If you are considering filing for bankruptcy, use the steps above to help guide you before filing. Consult a bankruptcy attorney to learn about chapter 7 bankruptcy law and other bankruptcy topics.