At first glance, this title might seem surprising to you. After all, popular opinions about personal bankruptcy have made it out to be one of the worst things you can do to your finances. While this opinion may have developed out of reasonable concern, the truth is that it's an unfounded myth that's preventing plenty of families from getting the financial relief they need. So when it comes down to it, when is personal bankruptcy best for your finances?
Calculate How Long You'll Be in Debt
Many families avoid declaring personal bankruptcy because they believe that faithfully repaying their debts will be better for their finances in the long run. But sometimes declaring bankruptcy can be much better for your finances, especially in the long run.
Essentially, you'll need to calculate how long you'll be in debt. Take a look at all of the debts you owe now, and determine how much your minimum payments are for each debt. Now take a look at how much of those minimum payments are cutting into your basic necessities.
For example, a person with $20,000 in credit card debt at a 20% interest rate might not be so happy to discover that he will be paying off that debt for many, many years to come. If he or she already cannot afford rent or food bills and is shuffling payments there may not be much improvement in the foreseeable future. Every late payment has the potential to damage a credit score and make it more difficult to secure a loan, buy a car or a home in the future.
With this in mind, discharging debts and dealing with the few years of so-called bad credit may be the smarter choice here.
Think How Much Better You Will be Prepared to Handle Your Finances with a Clean Slate
It helps to think about how much you have learned about how easy it is to get buried in debt. Credit counseling and the debt management courses you are required to take as part of your bankruptcy will also help you not to make the same mistakes in the future.
Sometimes, declaring personal bankruptcy is about more than your finances - it's about finally getting the peace of mind you deserve.
Don't Be Afraid to Declare Personal Bankruptcy
The bottom line is this: sometimes it's better for your finances if you declare personal bankruptcy. If you're ready to discuss this option, contact a local bankruptcy attorney today to get the advice you need.