- Personal Finance
Bankruptcy…A Wise Decision or a Foolish Mistake?
As thousands of Americans struggle to keep their lives from being devoured by debt, many of them have made the decision to file for bankruptcy. If you, too, are suffering through a financial crisis, you may be trying to decide if bankruptcy would be a solution for you. Here are some ways to tell if bankruptcy would a wise move on your part or a foolish mistake.
Scrutinize your Debts
Before deciding to file bankruptcy, you need to look closely at the types of debts you owe. Other than your mortgage and car loan, are the majority of your debts the results of credit cards, medical bills or other unsecured loans? If so, bankruptcy could greatly help your situation. On the other hand, if you owe mainly student loans, child support, alimony or taxes, bankruptcy may not be the wisest move for you. Those types of debts are not dischargeable and you could end up little better off than before.
Have You Considered All Your Options?
Filing bankruptcy may seem like a quick and simple solution to financial problems that feel overwhelming. Remember, though, there are long-term repercussions you will have to deal with. Maybe your situation isn’t really as hopeless as you think. Try talking to a credit counselor or working out alternative arrangements with your creditors. Finding a way to work with your creditors and pay your debts may be difficult, but if it can be done, it is often a better solution than filing for bankruptcy. Only when those efforts have been exhausted is it time to turn to bankruptcy.
The Truth About Bankruptcy
Are Your Wages Being Garnished?
If you already have judgments against you and money is being withheld from your paycheck, bankruptcy may be a good option for you. When your wages are being garnished, it becomes even more difficult to pay your other bills and provide your family with the necessities of life, like food clothing and shelter. Bankruptcy can halt the garnishments quickly.
Are You Unable to Meet Your Daily Needs?
If things have become so bad that you are having trouble buying groceries or paying utility bills, bankruptcy may be a wise decision. If you are using credit cards to buy the necessities of life, you are only digging your financial hole deeper. If you are unable to meet the minimum payments, you will soon be dealing with constantly nagging bill collectors, threats to take you to court and worse, your credit will be cut off and then how will you buy groceries or gas to get to work?
Are You Emotionally Ready to Deal with Bankruptcy?
Bankruptcy is a perfectly legal solution to overwhelming debt, yet some people cannot live with the idea. To some, it goes against their ethical and moral standards, even though it is a right given to you by the government. To others, it feels too much like failure and they are not mentally able to accept that concept. If you believe, however, that you are creating a fresh start for yourself and are doing the right thing for you and your family, even though your pride may suffer, bankruptcy could be the answer you have been seeking.