When Should I File for Bankruptcy?
While having debt can be stressful for everyone, it depends on the amount and what kind of debt to be eligible for filing for bankruptcy. But as we are all aware, many kinds of debt involve credit cards and how easy it is to let the bills pile up. Life is also full of surprises that can make large dents in the bank account, and even charge it on the card, expenses that we can’t always afford to pay off.
After weeks, months, and even years of struggling to pay off this debt, it can seem like there is no light at the end of the tunnel; the hole of financial turmoil has made everything seem impossible. But this is when bankruptcy can provide a helping hand when you’re drowning in the depths of debt.
Here are a few signs to determine when you should file for bankruptcy:
- When you only make the minimum payments on your credit card
- When you are unsure of the overall amount of debt you have
- When you are constantly getting calls from bill collectors
- When you are considering debt consolidation
- When the idea of sorting out finances makes you feel like you are not in control
Determining Whether or Not to File for Bankruptcy
If you can identify with at least two of the signs mentioned above, heavily consider assessing your financial situation. If you absolutely believe that you can’t ever afford to pay off this debt, filing for bankruptcy can be a good choice.
You can also speak to a professional bankruptcy attorney about your situation. An experienced lawyer will be able to further assess your situation and make a recommendation of which type of bankruptcy would be best for you, if you are eligible. They can also negotiate lower payments on mortgages and credit unions to avoid foreclosures and repossessions, provided that you can afford lower payments.
But to figure out where are you are financially, create an inventory of all liquid assets. This includes vehicles, stocks, bonds, real estate, college savings accounts, and other non-bank account assets. Determine their financial worth and add them up to find the total.
Next, gather all bills and credit card statements. If the total amount of your bills greatly exceed your liquid assets, filing for bankruptcy will be your one-way ticket out. But it isn’t anything to be taken lightly because it does come with hefty price.
There are 2 ways to go bankrupt: voluntarily filing or creditors asking the court to declare them bankrupt.
But there are several different ways to file for bankruptcy. It is highly recommended to speak with a professional bankruptcy attorney to decide which one is best for you, as there are pros and cons to each one.
Chapter 7 Bankruptcy
People choose to file under Chapter 7 for a number of reasons, and your case may not be so different from others. But some of the most common include: overwhelming medical expenses, marital issues, overextended credit, and unemployment.
What Chapter 7 does is it liquidates all assets to pay for the majority of your debt. The cash is then distributed to the appropriate banks and creditors.
Within 4 months, you will then see a discharge notice and your bankruptcy note will remain on your credit report for up to 10 years. However, this isn’t always a bad thing; it is still possible to have a home even after filing. But one of the best benefits of Chapter 7 is that it quickly provides a fresh start.
Chapter 13 Bankruptcy
Chapter 13 is for individuals with less severe amounts of debt. Especially if you want to keep your property, filing under Chapter 13 would most likely be the best option for you.
Known as reorganization bankruptcy, this will allow you to pay off the debt over 3 to 5 years. As long as you have an annual income that is stable, you will be given a grace period. But if you have any debt at the end of the 3 to 5 year period, it will be discharged.
As soon as you have the Chapter 13 bankruptcy approved by the court, you can look forward to finally getting rid of those calls from your debt collectors. But you must then begin working to pay off the debt as the period starts right after the approval. On the bright side, you will be able to keep your property and possessions.
The Reality of Declaring Bankruptcy
While you may not want to come to terms with reality, admitting the need for help with getting out of debt can be the key to freedom. Drowning in this financial turmoil can seem like there’s nowhere to turn, but simply admitting and filing for bankruptcy will surely make overwhelming amount of bills disappear.
Simply by working with an experienced bankruptcy attorney, you can get the fresh start you’ve been dreaming about. If you need help finding an attorney, you can reach out to Berry K. Tucker & Associates, Ltd. These professionals have years of experience in working with diverse cases and can provide you with the well-rounded advice you need for yours. They can also negotiate lower rates with banks and debt collectors, allowing you to keep your possessions while maintaining the ability to make on-time payments.
If you are still unsure about whether or not you should file for bankruptcy, don’t hesitate to reach out to Berry K. Tucker & Associates, Ltd. for a free consultation. Their attorneys will guide you down the path to financial freedom, whether or not you choose to file.