When debt starts to stack up, it can feel like there’s no way out. Thankfully, filing bankruptcy can be your ticket out of debt, putting you back on track with your financials. When your debts are either forgiven or put on a lower payment plan, you can finally start to get your finances in order and start raising your credit score. That being said, bankruptcy doesn’t come free. Not only do you need to consider attorney fees, there are also non negotiable filing fees that must be paid. The cost of filing for bankruptcy can put many off from filing, even though the long term outcome may be drastically better for you. If you’re worried about finding a way to pay for bankruptcy, check out our tips to cover your bankruptcy.
Finding money for bankruptcy
Using your tax return
Though getting a big tax return isn’t necessarily a good thing — it means you paid more into taxes than you should have, meaning you got a smaller paycheck — a tax return may be a way out of debt. As soon as you get your tax return, you should put it aside so you can use it to pay your legal fees for bankruptcy. Keep in mind that if you owe back taxes your tax refund may be seized by the IRS. In this case, there’s nothing you can do to get the refund back.
Don’t pay debts that will get removed
If you have credit card debt, medical bills, payday loans or any of the other forms of dischargeable debt, cease paying on them as soon as you decide to file for bankruptcy. If your bankruptcy goes through, these debts are discharged and you will not have to pay them back. Keep in mind that you should only quit paying on your debt if you are certain you are going to file, since your debt can quickly stack up otherwise. Note that this does not qualify for non-dischargeable forms of debt like student loans, alimony or child support. As such, you should still pay on these debts.
If you also plan to retain ownership of your house or car, you should also make plans to stay current on your payments. Failure to pay on time may result in you losing your property during the bankruptcy proceedings.
Borrow money from family
If you have any friends or family who would be willing to share money with you, ask them. You’ll likely be able to pay them back quickly since you won’t have such high debt payments anymore. If you do end up borrowing money, make sure to keep track of who gave the money and when so you can pay them back easily.
Reduce your expenses
This one may seem obvious, but it’s vitally important to limit your expenses as much as possible. If there is any item in your budget that can be removed, you should take it out. Even minor expenses like gyms or streaming services should be limited, as they can add up quickly. If your income is combined with a spouse, work together to see what can and can’t be cut out of your budget. Hopefully, an improved budget will allow you to start saving for bankruptcy.
Do not file for bankruptcy alone
Though you can file for bankruptcy without a lawyer, we suggest avoiding this at all costs. If you fail to file your bankruptcy properly, your debts will not be discharged. Without the advice of a lawyer, it’s easier for creditors to take advantage of you during the bankruptcy proceedings. You also run the risk of losing property that you wouldn’t lose if you have a bankruptcy lawyer. Please reach out before considering filing by yourself.
Are you ready to file for bankruptcy and get a fresh start on life?
Contact Reynolds & Gold. No matter your bankruptcy needs, we can assist you through the process of filing.