If you’re contemplating filing a personal bankruptcy, you should double check your credit report at each credit bureau BEFORE doing so. There are two main reasons for this:
- Is the situation as bad, as or, worse than you think?
- If you’re going to take the step into bankruptcy, you’ll want it to go as smoothly as possible.
Most people may have a fair handle on who they owe money to and the approximate amounts that are owed, but if you’re not sure, get a copy of your report. Your report will provide you with a list of who you owe money to.
You may be surprised to discover that some older debts have already been written off. Sometimes a creditor may decide that the cost of trying to recover the debt is not worth the amount that’s owed to them. They may have decided in the past to simply give you a break and write it off. If that’s the case, is your debt situation as bad as you thought it was, and if not, would you still file the bankruptcy on the smaller debt load? Once you file the bankruptcy, it’s almost impossible to undo it, so again, you want to be certain that filing makes sense.
You may also discover some debts that you may have forgotten about; an old phone bill or gym membership that you’ve not heard from in a while. In this scenario, you could have more debt than you realize.
To avoid having creditors call you during the bankruptcy, make sure that you inform the trustee of all your known creditors and any collection agencies hired to collect on your debt. If you don’t tell the trustee about a creditor, they’ll more than likely continue calling to demand payment during the bankruptcy as no one has told them that you’ve filed.
Checking your credit report could also uncover any legal action that has been taken against you. Again, most people may know that legal action has been taken by a creditor, but what if you’ve moved and never updated the creditor on your new address? They may have been sending legal notices to your old address, and therefore, you may be unaware of how bad the situation really is.
The credit report will also indicate which debts are registered as secured debts to assets you own.
Filing a bankruptcy for most people will be a once in a lifetime event, so if you’re going to do it, you want to do it right to ensure the process runs as smoothly and effectively as possible, so that you can concentrate on a better financial future and fresh start moving forward.