Do you need to file bankruptcy?
Deciding to file bankruptcy can be a tough decision. Almost everyone confronting the decision vacillates from "Fight" to "Flee": struggle to pay the debts versus get relief from the constant pressure and start over. Our opinion.
The alternatives to bankruptcy :
Can you avoid bankruptcy on your own : To explore non bankruptcy alternatives, create a budget for your realistic, monthly expenditures for current living. Include mortgage and car payments, but exclude all other existing debt service. Try these nifty online budgeting tools to help.
With the money you have available each month after paying your current living expenses, can you pay off your existing debts at the current interest rates in 3 years?
monthly payments: calculate what it really takes to pay off credit cards at credit card interest rates with this online tool. Consider, too, the alternative uses of that money.
Can you reduce expenses, increase income, negotiate rates or sell assets to make that possible?
Consider long and hard before resorting to liquidating IRA's or 401K plans to pay creditors: These assets are generally protected from collection actions by creditors; they are hard to replenish once spent; but most importantly, using retirement savings to pay creditors may create new debt in the form of income taxes and penalties for early withdrawal. Your good intentions to repay creditors may just end up substituting Uncle Sam as a tax creditor in place of your existing creditors.