If you’re having trouble paying off your debts, and are thinking about claiming bankruptcy, then you need to understand just what filing for bankruptcy is all about. Bankruptcy is a legal procedure that relieves individuals from the financial burden of paying off mounting debts, and gives them the chance of a fresh start.

However, before starting the process it’s important you know exactly what you’re getting into. Here are 4 realities you’ll need to confront when filing for bankruptcy.

1. Filing for bankruptcy won’t fix your problems.

It’s comforting to think that all your problems will go away once you’ve claimed bankruptcy and filled out all the necessary paperwork. But this is just foolish thinking. If you haven’t learned to change your ways throughout the bankruptcy process, then you’ll no doubt keep making the same mistakes in the future.

For example, if you’re an over spender, then you’ll continue to be, even post your bankruptcy. And spending more than you earn will land you in trouble no matter how much you earn, and no matter what assets you currently own.

2. It’s a lot of paperwork and meetings.

Claiming bankruptcy is far from a walk in the park. It’s a convoluted process, involving lots of paperwork and scheduled meetings with your lawyer. Indeed, you’ll often find that claiming bankruptcy actually requires more paperwork than applying for a home loan, and you’ll also find yourself needing to take time off work to attend those important meetings with your lawyer. Yep, it’s not a easy process to go through, so don’t be fooled into thinking it is.

3. You lose control over your financial decisions.

When you file for bankruptcy, your financial decision making freedom is gone out the window. You’ll no longer be in control over your finances, and this can be a bitter pill to swallow if you’re used to taking charge financially.

For example, deciding which of your creditors is to be paid first will no longer be up to you, and this can cause lots of problems for you. Of course, prevention is always better than a cure, and if you’re struggling with multiple credit card payments then it’s wise to consult a debt consolidator like Fox Symes to see that you get out of debt – fast.

4. You’ll need a lawyer, and they don’t come cheap.

One thing’s for certain when you file for bankruptcy: you’ll need a lawyer. Having a reputable and knowledgeable lawyer by your side is absolutely necessary. Claiming bankruptcy is a confusing process, and you’ll need expert help every step of the way.

But as we all know, lawyers don’t come cheap. They’ll either charge a flat fee to file your bankruptcy, or charge an hourly rate, and most lawyers require up front payment before your case is even started. This means that you’ll need to get this cash together somehow, putting you in an even more problematic financial situation.

Claiming bankruptcy is no easy feat. It has its own set of challenges and costs, and may or may not be the best option moving forward. Make sure you take note of the above before contacting a lawyer to start your case, and hopefully you’ll save yourself from even more headache.

About the author: This post was contributed by Paul Stephens, an active personal finance blogger who loves sharing his vast financial knowledge with others online. 
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