Recovery Steps When You’re Out of Financial Options
More than 1.5 million Americans filed for bankruptcy in 2010. While the economy is showing signs of life, many people aren’t seeing a recovery in their personal finances.
Getting back on your feet can be a challenge, but it’s not impossible, say personal financial planning experts at the Pennsylvania Institute of Certified Public Accountants (PICPA). While filing bankruptcy may seem like the only option left, it may not be right for everyone. Know what’s right for you.
Develop a Plan
You’re out of money, you have been unemployed for an extended period of time, and creditors are knocking at your door. This isn’t the time to run out and take action without thinking. The decisions you make now will have a lasting impact on your financial life. You need a plan.
Bankruptcy is a big deal, and it will affect your life for many years to come. If you’ve exhausted every other option for solving your personal financial crisis and have been advised to file bankruptcy, understand what you’re getting yourself into.
There are two different kinds of personal bankruptcy: Chapter 7 and Chapter 13. With Chapter 7 filings, most of your assets will be sold to cover your debts. In a Chapter 13 filing, you get to keep your assets, but your debt is reorganized and you make scheduled payments until the terms of your agreement are reached. Seek advice on which type of filing would be appropriate for you.
Bankruptcy can give you a fresh start — sort of. Your debt will be gone, but not forgotten. For several years lenders may be reluctant to work with you. A bankruptcy can appear on your credit report for up to 10 years after filing. If you choose this option, start working immediately to rebuild your credit history. It won’t happen overnight, but you should start by doing the following:
A CPA Can Help
Experiencing a personal financial crisis is scary, and you may feel like you’re out of options. Seek competent help and advice quickly so you can find solutions and move forward. To find a CPA near you, visit www.IneedaCPA.org.
The Pennsylvania Institute of Certified Public Accountants is a professional association of more than 20,000 CPAs who work in public accounting, industry, government, and education. Founded in 1897, PICPA is the second-oldest state CPA organization in the United States. To find a member CPA in your area, visit our Web site at www.picpa.org and click on CPA Locator.
LAST UPDATED 8/12/2011