Are You Ready to File Bankruptcy?

by The Sage Libraries
by The Sage Libraries

If you are struggling with financial woes and have wondered if you should file bankruptcy, you are not alone.  The number of people forced into bankruptcy is rising every day.  It is not a decision that is pleasant to make and is often a last resort.  Is now the right time for you to file for bankruptcy protection?  Ask yourself these questions.

Have You Tried to Find Alternatives?

Take a hard look at what you have done to attempt to resolve your situation.  Have you tried financial counseling?  There are nonprofit agencies that may be able to help you negotiate a repayment plan with your creditors that would be manageable for you.  Alternatively, you can try calling your creditors yourself and striking a deal with them. 

Have You Educated Yourself About Bankruptcies?

Have you done your research?  Do you have an idea what type of bankruptcy for which you might qualify?  Chapter 7 and Chapter 13 are the two most common typed of bankruptcies filed for by individuals. 

Chapter 13 requires that you have an income and work out a repayment plan with your creditors.  You will make set payments to them over the next three to five years.  At the end of that period, your payments will end and any remaining debt will be erased.  

Chapter 7 allows you to liquidate debt immediately.  The debts must be “dischargeable” debts.  Once you have filed for bankruptcy, those creditors are no longer allowed to attempt to collect the money you owe them.  No more phone calls, no more letters, no more harassment. 

Dischargeable debts include medical bills, unsecured credit cards and other unsecured loans.  There are, however, debts that will not be eliminated by bankruptcy, such as any recently owed taxes, child support, alimony, student loans, damages owed due to drunken driving injuries and a few others.  Even if you file for bankruptcy, those debts will not be forgiven.  Look at the debts you owe and consider if filing bankruptcy would help you enough to improve your situation. 

Do You Know the Consequences of Bankruptcy?

If there weren’t any unpleasant consequences to bankruptcy, it wouldn’t be as hard to decide to file.  You need to understand that your credit report will reflect this bankruptcy for 7-10 years.  Because your credit score will lower dramatically, it will be difficult to find new sources where you can obtain credit in the near future.

You also need to be aware that these are not insurmountable issues.  If you proceed cautiously, you will eventually be able to rebuild your credit rating.  After all, not being able to pay your bills also seriously affects your ability to get credit.  At least you will have a fresh start after filing.

If after you have asked yourself these questions and you feel you really are ready to file for bankruptcy, seriously consider hiring an experienced bankruptcy attorney to help you through the legal ins and outs.  A competent attorney will help you avoid costly mistakes and guide you towards your new beginning.

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