Whether you're a mom or a dad, raising children on your own is quite a challenge. From trying to attend every sporting event to keep the kids in warm and fashionable attire, you have an endless juggling act to keep up, with many sacrifices made along the way. Sometimes, the financial aspects of single-parenting can overwhelm, leaving you with little choice but to consider drastic action. Is bankruptcy a practical way out for you? Would it solve your immediate problems? Would it leave you with a limited financial future? While bankruptcy may be a confusing prospect, it's definitely worth your consideration, especially if you feel there's no other way out.
Understand the Indications you May Need Bankruptcy
There's a difference between being on a low-budget and drowning in debt. Although you might sometimes feel totally overwhelmed, there are specific indications in your financial life that tell you filing for bankruptcy is a good option, at least for consideration:
- You're being contacted all the time by bill collectors, for whom you have no answers.
- You can barely afford to make minimum payments on everything.
- You're using credit cards to cover bare necessities.
- You're unsure of how much money you actually owe, in total.
- Your debt-to-income ratio is completely imbalanced.
- Frustration from your finances is causing you constant, health-affecting stress.
There may come a point when you realize on your own that bankruptcy is the only way out of your crisis, or you may be unsure, still knowing you have to do something. Don't put it off any longer, because you know solving this ginormous problem will make life in general far more bearable, no matter what you have to do.
Prepare for an Appointment with Your Bankruptcy Attorney
A lawyer needs to know everything about your financial life, from what you make and spend to what you own in assets and every cent you owe. Start with a list of everything you own of value, including the car you drive, houses you own, all bank accounts and anything that could be sold, to pay off creditors. Then, tackle the task of determining exactly how much you owe and to whom. Also, if your children's other parent is involved in supporting them, bring that documentation along, too, including anything in arrears.
Choosing Between Chapter 7 and 13
While Chapters 7 and 13 may sound intimidating or confusing, there's a real simple difference between them: Chapter 7 means wiping out all or nearly all of your debt, in its entirety, and 13 restructures it, with a plan to pay some or all of it back, on a court-approved schedule. You'll likely qualify for 7 if what you owe is far greater than what you own (leaving you with no real way to repay) and you'll probably qualify for 13 if you have the means, usually through the sale of assets, to repay at least some of your creditors.
Choosing between the two isn't normally hard, because you either can or can't find a way to pay everyone you owe. Chapter 7 will leave you with a clean slate, whereas 13 binds you to creditors, with court supervision, until which time as your debt has been satisfied. Both, however, leave you with long-term consequences.
How to Start Your Financial Life Over Again
Filing may leave you feeling stigmatized, but it isn't anything you can't overcome. Once the discharge date of your filing has passed, if you file for Chapter 7, you are legally free to apply for a new credit card or loan, but it's a good idea to wait, as you'll likely be turned down by the most reasonable lenders. Under a Chapter 13, you may not be allowed much financial wiggle-room until your debt is fully paid. Either way, though, you're going to learn from the past and set a course for a smart future for you and your kids:
- Develop a household budget and stick to it, no matter what.
- Limit purchases on credit to only that which will help you to rebuild credit and nothing more.
- Avoid using prepaid credit cards; those companies don't report your activity to the credit bureaus and thus you need to prove yourself again, through timely minimum payments.
- Have the discipline not to splurge, even if it's on the kids you love so much and would do anything for.
- Apply what you learned from bankruptcy education and consumer counseling.
- If they're old enough, explain the situation to your kids so they can learn to contribute to a more frugal household, along with learning a few lessons of their own.
- Contact your attorney if you have any questions or concerns about navigating your financial future.
Bankruptcy isn't always the solution, but for many people, including single parents like you, it can be the lifeline needed to rescue your household. Single parenting is often a struggle; however, it might become a lot more manageable after filing, especially if you go into the proceedings with a superhero lawyer who knows exactly what to do. They'll recognize the superhero single parent that you are and help you figure out how to keep doing what you do best. To learn more about your options, contact services such as Charles J Schneider PC.