Sometimes, life happens. If you’ve recently experienced personal bankruptcy, or are in the midst of a financial hurricane, it’s normal to feel anger, frustration, and shame. For many of us, bankruptcy is our worst nightmare and can feel like the ultimate financial (and personal) failure. But that doesn’t mean your future can’t be bright. With a little encouragement, a little strength, and a lot of wise guidance, you can start taking baby steps away from the storm clouds and towards financial peace and financial normalcy.
So how can I navigate personal bankruptcy?
Whether the pandemic gutted your business or you’re drowning in personal debt, here are a few tips for coming out the other side with your life and your wallet at least semi-intact.
Don’t Cash Out Your Retirement
Stealing your financial future is never the answer to fixing your financial present. While cashing out retirement savings is often our easy answer for a complex financial mess, nothing is free. Cashing out your retirement usually results in crippling taxation. And despite new pandemic-era laws that may soften the taxation blow, avoid siphoning from your retirement at all costs. As you’ll see in a minute, it’s not your only answer, and if you can avoid it, avoid it.
Explore Forbearance
Given the hardships many faced due to coronavirus, many commonplace payments are in forbearance. From federally insured student loans to mortgage payments, look into whether your lender is letting you skip a few payments. Of course, it’s always recommended to pay if you can pay, but if a few months off gets you back on your feet, take advantage of the forbearance to better your bank account.
Focus on Credit
In the aftermath of bankruptcy, many believe their credit is permanently damaged. In reality, many who file bankruptcy see their credit rebound within just two years. There are plenty of sites that offer free access to your credit report. Monitor your progress throughout the years and address any unexpected dips. Staying on top of your credit can give you some emotional wins and propel your financial recovery forward.
Steer Clear of Scams
Unfortunately, the financially desperate are especially vulnerable to scammers claiming they can improve your credit or provide otherwise heroic financial services. Remember, never pay anyone upfront and if someone is telling you not to contact credit reporting agencies, run for the hills. Be cautious when receiving unsolicited help and always do your due diligence.
Shift Your Mindset
It’s incredibly easy to fall into a negative and hopeless headspace when facing something as draining and devastating as filing bankruptcy. Just remind yourself that far wealthier people than you have faced bankruptcy and lived to tell the tale. Take Dave Ramsey, the world-renown financial guru who bounced back from bankruptcy to become a multimillionaire. Entrepreneurs from Walt Disney to Henry Ford and George Foreman have all returned to riches following bankruptcy.
While it’s hard to stay positive, don’t let discouragement drag you down. The more you dwell on past mistakes, the worse you’ll feel, and the more likely you’ll be to repeat similar missteps. More importantly, don’t be afraid to seek psychiatric support and counseling as you navigate this financial blow.
Consult A Professional
Navigating bankruptcy is an emotionally taxing dilemma with complexities that sometimes only a trained eye can anticipate. Having a professional walk by your side through the financial storm of bankruptcy alleviates that burden. And of course, professionals can find solutions you’ve never heard of or considered. While retaining a bankruptcy attorney isn’t cheap, neither is worsening your debt by falling into deeper pitfalls due to naivete or unexpected complications.
Not to mention, after meeting with a bankruptcy lawyer, many realize that filing isn’t their best option. Or they need to determine which is better, Chapter 7 or Chapter 13 for their unique situation. Also, there may be a less drastic and less devastating option to salvage your mess and alleviate the burden of piled-up bills. So, save yourself the potential pain and consult a professional today. Most bankruptcy firms offer free consultations.
Overall
You may feel hopeless in the face of bankruptcy, but know that there’s always life after loss, especially if you have the right tools and the right mindset to guide you through the darker days.
More questions on bankruptcy and if its right for you? Contact Hines Law Offices. Our Boston area bankruptcy firm has been helping the residents of Massachusetts with debt solutions for over 20 years. We specialize in Chapter 7 and Chapter 13 and will help you regain control of your finances to get your life back on track. Call and speak to an experienced bankruptcy attorney today. Free
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