Is Bankruptcy the Right Option for You?
Present-day economic circumstances are making a lot of individuals who have never before thought about filing bankruptcy to now consider it as a potential solution to their financial difficulties. The problem is that not everyone can be assisted by filing bankruptcy. So, if you’re one of those individuals who has never, until recently, given thought to filing bankruptcy, you need to know whether bankruptcy will help you or not.
Should You Even Be Thinking About Filing Bankruptcy?
As funny as it sounds, there’s no common test you can take to determine whether bankruptcy is okay for you. You don’t need a particular level of debt. You don’t need to make less than a particular sum of money. And, you don’t even need to be in arrears in payments to your creditors.
Bankruptcy isn’t a decision you make by checking off boxes on a flow chart. Bankruptcy is a personal decision. But, it’s a personal decision that’s founded on certain factors in your life. They are some of the things you need to consider before deciding one way or the other about bankruptcy.
1. Are you in financial distress? You may be in financial distress if you’re having difficulty paying the minimum payments on your credit cards. And, if you’re scarcely able to keep necessaries like food, clothing and shelter you’re probably in financial distress.
2. Do you live paycheck to paycheck? If you had even a moderate health issue, would it put you in a financial crisis?
3. Are you judgment proof? Put differently, do you have no assets that can be confiscated and sold to pay off your financial obligations? You may not need to file bankruptcy if you’re judgment proof. Then again, judgments do stay around for a while. Each state’s judgment rules vary on exactly how long a judgment can hang around. But, what you need to consider is that your current bad situation may, and in all probability will, get better in the future. If it does, those judgments that were of no interest during your financial trouble will concern you because you could face the seizure of your future assets. Most lawyers will give you a free bankruptcy consultation. You should use it to talk about this particular issue.
4. Are creditors and collection agents harrassing you? Bankruptcy is one choice to stop that harassment. But, you can also halt it with a letter writing campaign under the federal Fair Debt Collection Practices Act and associated state law fair debt collection laws. But, bankruptcy is in all likelihood the best alternative if you’re getting harrassed and you’re in financial distress (see #1).
5. Are you looking at foreclosure? You’ll be able to block a foreclosure by filing a Chapter 13 bankruptcy. Chapter 13 allows you to restructure your debts and pay your mortgage arrearage over time.
Will Bankruptcy Help You?
Bankruptcy won’t give you more income. So, if you don’t make adequate money to support your life-style, bankruptcy isn’t your solution. You either need to lower your expenses or increase your income. You may even need to do both. But, you don’t need to file personal bankruptcy.
Bankruptcy also won’t help if your big debts are non-dischargeable debts. Bankruptcy law defines those debts that are dischargeable and those that are not. The following is a short list of many non-dischargeable debts in a Chapter 7 Bankruptcy under present-day bankruptcy laws.
* Recent taxes and government penalties
* Child support
* Criminal fines or court ordered restitution
* Personal injury awards where the debtor was inebriated at the time of the incident
* Debts that aren’t named in the bankruptcy filing schedule
* Student loans (there are exceptions but it’s almost impossible to meet the requirements for them. So, it’s better to consider student loans as non-dischargeable)
* Debts that were part of a preexisting bankruptcy case but weren’t discharged
Final Considerations for Personal Bankruptcy
Making Up One’s Mind whether to file bankruptcy isn’t an easy decision. But, it’s a decision you’ll be able to make if you adopt a reasoned and balanced approach to it. As part of your consideration, you’ll need to weigh your emotions, your background, your religious beliefs and your values. So, look at the following:
1. Do your own research. Read everything you can about bankruptcy. A wonderful resource for training yourself on bankruptcy law is the book The New Banktruptcy: Will It Work for You?
2. Keep your future in mind. Consider of how you’ll feel when the case is concluded and you’re out from under a pile of debt. How will you feel about yourself in 6 months or a year? Will you be pleased with your choice to either file bankruptcy or not file bankruptcy?
3. Find the proper bankruptcy lawyer for you. A tremendous place to find bankruptcy lawyers in your region is Legal Match. Virtually all bankruptcy attorneys will give you a free bankruptcy consultation. Use that free consultation to interview the lawyer. But, when you start questioning bankruptcy lawyers, don’t base your final hiring decision solely on price. It will be inviting to engage the cheapest. After all, you’re in a financial crisis so the more inexpensive the better, right? That’s not always the case. Question the lawyer first. Be sure you’re a good match with that attorney. Your bankruptcy lawyer will be working for you so you need to be comfortable with the whole approach to your case. You need to feel good about the fundamental interactions you have with the lawyer and staff. You want a bankruptcy lawyer who will assist you through this crisis in a positive mode. You don’t want to feel judgment or dislike from either the lawyer or the staff.
4. Filing bankruptcy is a moral decision. Don’t kid yourself into believing it’s not. But, you do have to make the decision that’s best for you and your household. So ask yourself: “Is it more honorable to press a losing financial battle that puts your family’s future at risk in an effort to pay back old debt?” Or, is it more respectable to recognize you did your best, you couldn’t make it work and you need a fresh start that will allow you to devote your personal time and effort into activities that will more positively affect your family’s future?”
Only you can answer that question. Take your time. Make the proper decision for you and your family. Once you’ve arrived at that decision, trust in your ability to make the right choice. Then, go ahead knowing that your financial troubles will soon slip away.
