Due to the widespread impacts of the coronavirus pandemic, the number of individuals filing for bankruptcy is likely to see an increase. Recent statistics from Debt.org demonstrate how bankruptcy is linked to the economy. As the economy suffered in 2010, the number of bankruptcy filings increased to 1.6 million. However, 2019’s economic recovery meant that these numbers decreased by approximately 50%. Now that the future of the economy is relatively uncertain, it’s time to consider your options.
A free bankruptcy consultation can give you some of the information you need before going any further.
1. Learn about the different types of bankruptcy before you get free bankruptcy consultation
Before entering your consultation, it helps to gather some basic knowledge of the various types of bankruptcy. This way, you can prepare to discuss which one might best suit your particular situation.
In the free consultation, both your attorney and you can ask questions.
The Department of Justice outlines a few basic types, including Chapter 7 and Chapter 13. Chapter 7 appoints a trustee to take over your property, with any property of value being turned over as payment to your creditors. In contrast, Chapter 13 means that you can typically keep your property but require a source of regular income to pay off debt. You also need to pay part of your income to your creditors.
2. Don’t forget to calculate your 6-month-income before your free bankruptcy consultation
To better advise you, your prospective financial advisor will need to have a clear overview of your finances. This involves checking whether you meet the requirements to file for bankruptcy. To help determine this, using a Bankruptcy Means Calculator takes certain factors such as your household size into consideration. The first step is to calculate your gross monthly income based on your last six months’ salary.
In addition, you should have a general idea of your assets and their value, as well as any debts. Compiling this information in a spreadsheet is a great way to present a broader idea of your finances.
3. Double-check the credentials of your financial advisor especially for free consultations
One of the pitfalls of attending a free bankruptcy consultation is being unsure whether your financial advisor is qualified. A Maryville University outlook for online finance degree graduates highlights how the number of financial advisors is projected to increase by 7% over a 10-year period.
Because there has been a marked increase in the number of financial advisors, you have more options to choose from. At the same time, it can be difficult to find the perfect fit. Don’t forget to verify any credentials before getting started. It's likely that the top financial advisors would have studied and been well trained in bankruptcy.
4. Think about the long-term impacts before declaring bankruptcy
Something to keep in mind is that declaring bankruptcy can have lasting implications on your future. If you are personally filing for bankruptcy, a Forbes article outlines how this can severely impact your credit score. In the future, this can make it extremely difficult to get your loans approved and gain access to lines of credit.
If you plan on purchasing a home, starting a business, or pursue any high-cost ventures, you should keep this in mind. In addition, bankruptcy records are available to the public. This is something that will impact your life for the next 10 years. Lastly, it’s important to note that declaring bankruptcy won't erase all your debts, including student loans, alimony, child support, and taxes.
5. Be financially prepared to make it through the whole process
While there are various pros and cons of attending a free bankruptcy consultation, make sure you take into consideration the fact that the filing process can be extremely complex. Seek professional advice so that you’re more likely to complete the right steps and gain assistance when it comes to filling in lengthy forms. Without an attorney, it can be rather difficult to make the right decision.
Hiring a lawyer means that costs can quickly add up during the time it takes to file for bankruptcy. Because of this, doing your research and finding a qualified expert for free can help guide you in the right direction.
From the advice outlined above, attending a free bankruptcy consultation can give you a more accurate overall picture. While filing for bankruptcy can help you get a fresh start, you should also consider other debt management options before doing so.
Exclusively written by Rachel Quinn