Bankruptcy is a difficult, and often a scary decision to make. Many people feel the pressure and weight of burdensome debt that has a negative impact their life on a daily basis. Bankruptcy is not something that people should come to lightly. Filing bankruptcy can negatively impact your credit for years.
Signs that Bankruptcy Might Be Right for You
If you are suffering from one or more of the situations below, bankruptcy might be a solution to your financial situation.
- Are creditors making threatening phone calls and sending you harassing letters?
- Are your wages being garnished?
- Are you currently in or in danger of being foreclosed on?
- Are you only making the minimum payment on your bills?
- Have you had a car repossessed or in danger of having your car repossessed?
- Have you been laid off or been cut down to part-time work?
- Have you racked up high medical bills?
If you answered yes to any of the questions above, there is a chance you may be a good candidate for filing for bankruptcy. It’s not that simple, however. You should take a more thorough look at your debts and assets.
Assess Your Financial Situation
The simplest definition of bankruptcy is when you owe more in debt than you can afford to pay with your combined income and assets. With this in mind, take stock of your assets versus your debts. Add up all your income sources and financial assets including:
- College savings accounts
- Retirement funds
- Real estate
Approximate how much each is worth and total it together. Now do the same for your debts. If you have an outsized ratio of debt to assets, bankruptcy might be worth considering. However, before rushing to a decision consider some alternatives to filing bankruptcy.
Alternatives to filing bankruptcy
- loan financing
- loan modifications
- credit card consolidation
- negotiating with creditors
- credit counseling
However, in some situations filing for bankruptcy is the best solution. If you find yourself overloaded in debt and unable to make monthly payments it’s probably time to consider bankruptcy.
Chapter 7 or Chapter 13 Bankruptcy
Some important questions to ask about whether bankruptcy is right for you are dependent on whether you will file under Chapter 7 or Chapter 13 of the bankruptcy code. Chapter 7 bankruptcy is known as “straight” bankruptcy or “total liquidation” bankruptcy where, a debtor with no assets, receives a discharge of all allowable debts. Chapter 13 bankruptcy is where a debtor is placed into a repayment plan to come current on secured debts like a house or car, and eliminates most other allowable debts like credit cards.
Seek the professional advice of a lawyer before deciding what option is best for your situation. An experienced bankruptcy attorney will be able to assess your debts, income, and other factors to determine the best route going forward, whether that is filing Chapter 7 or 13 bankruptcy, or possibly not filing at all.
Contact us right now for a 100% fast and free bankruptcy evaluation from a bankruptcy attorney in your area. It costs nothing and requires no obligations.