Is Bankruptcy the Proper Option for You?

Current economic circumstances are causing a lot of individuals who have never before considered filing bankruptcy to now consider it as a workable solution to their financial problems. The problem is that not everyone can be assisted by filing bankruptcy.  So, if you're one of those people who has never, until recently, given thought to filing bankruptcy, you need to know whether bankruptcy will assist you or not.

Should You Even Be Thinking About Filing Bankruptcy?

As peculiar as it sounds, there's no common test you can take to determine whether bankruptcy is appropriate for you.  You don't need a particular level of debt.  You don't need to make less than a particular amount 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 marking 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 trouble?  You may be in financial distress if you're having difficulty paying the minimum payments on your credit cards.  And, if you're barely able to keep necessities like food, clothing and shelter you're probably in financial distress.

2. Do you live paycheck to paycheck?  If you had even a small health issue, would it place you in a financial crisis?

3. Are you judgment proof?  Put differently, do you have no assets that can be seized and sold to pay off your 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 laws vary on exactly how long a judgment can hang around.  But, what you need to look at is that your present-day bad situation may, and likely 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 be looking at 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 option to stop that harassment.  But, you may also terminate it with a letter writing campaign under the federal Fair Debt Collection Practices Act and assorted state law fair debt collection laws.   But, bankruptcy is in all likelihood the best choice if you're being harrassed and you're in financial trouble (see #1).

5.  Are you facing foreclosure? You'll be able to block a foreclosure by filing a Chapter 13 bankruptcy.  Chapter 13 permits 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 enough money to support your lifestyle, bankruptcy isn't your answer.  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 abbreviated listing of some 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 nearly impossible to meet the requirements for them.  So, it's advisable to interpret student loans as non-dischargeable)
* Debts that were part of a pre-existing bankruptcy case but weren't discharged

Closing Considerations for Personal Bankruptcy

Determining whether to file bankruptcy isn't an simple 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, consider the following:

1. Do your own research.  Learn everything you can about bankruptcy.  A fabulous resource for educating yourself on bankruptcy law is the book The New Banktruptcy:  Will It Work for You?

2. Keep your future in mind. Think of how you'll feel when the case is ended 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 right bankruptcy lawyer for you.  A marvelous place to find bankruptcy attorneys in your region is Legal Match.  Nearly 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 completely on price.  It will be tempting to engage the most bargain-priced. After all, you're in a financial crisis so the more low-priced the better, right?  That's not always the case.  Interview 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 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 fight a losing financial battle that puts your family's future at risk in an attempt to pay back old debt?"  Or, is it more respectable to acknowledge you did your best, you couldn't make it work and you need a clean start that will permit you to devote your personal time and effort into actions that will more than positively bear on your family's future?"

Only you can answer that question.  Take your time.  Make the appropriate decision for you and your family.  Once you've come to that decision, have faith in your ability to make the correct choice.  Then, move forward knowing that your financial troubles will shortly give way.