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Financial Friday: What to consider before filing for bankruptcy

Updated: Apr. 2, 2021 at 12:35 PM CDT
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HUNTSVILLE, Ala. (WAFF) - Times are tough for a lot of people today. Job losses, loss of loved ones, time away from work due to illness, are situations that may make you consider filing for Chapter 7 bankruptcy.

Bankruptcy should be the very last resort, but especially now during the Covid-19 crisis. It is a serious financial decision that requires careful consideration.

WAFF spoke with Briana Cousins at Redstone Federal Credit Union. She offered some tips to think about before moving ahead:

  • Filing for bankruptcy can be expensive: Court costs and attorney’s fees add up and are non-dischargeable. These costs can easily reach $4,000.
  • You may lose property: If your assets are worth more than state and federal exemption guidelines, they can be liquidated and the proceeds divided up among your creditors. This can include your home, car, heirlooms, and jewelry.
  • It will damage your credit: A bankruptcy filing will remain on your credit report for 10 years. In addition, it will likely cost you more to get credit for a long while after that.
  • It doesn’t solve spending problems. Bankruptcy fixes the issue, not the cause. It won’t be much use if you spend more than you earn.

Restone Federal Credit Union has a team of financial counselors. It is a free service if you’re a member. The number to call is 256- 722-3796.

They can help you look at your situation and debts and talk through, if, bankruptcy is a good idea for you.

For more ways to save be sure to tune in at noon every Friday for WAFF 48′s “Financial Friday” segment.

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