Filing Personal Bankruptcy – Can I? Should I?

The decision to file bankruptcy is difficult at best.

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Bankruptcy may not be the right solution for you, but you at least owe it to yourself and your family to find out about all of your options so that you can make an informed decision.

Many people are hesitant to even think of filing bankruptcy because they are good, moral, upstanding, hard-working people. They have always paid their bills. And they aren’t the type to look for an easy way out.

So they struggle month in and month out to pay their bills. And all the while their creditors are turning up the heat. Before too long, with all of the late fees, penalties and interest, they realize that they are barely keeping their head above water. And without a miracle or a winning lottery ticket, they know in their hearts that there is simply no way they are ever going to be able to get caught up.

If you answer true to some of the questions below, seriously consider talking to a bankruptcy attorney:

• Are you routinely taking cash advances on one credit card to pay the minimum balance on another?
• Can you barely afford to pay the minimum balances on your credit cards?
• Do you look at credit card offers in the mail, and hope you can qualify for just a small amount to tide you over?
• Is financial stress affecting your health?
• Have you bounced a check recently?
• Are you frequently late paying bills?
• Are you paying more money than you make just for monthly living expenses?
• Have you experienced a dramatic drop in income that you don’t anticipate replacing anytime soon?
• Have you recently become partially or totally disabled?
• Are you going through a divorce resulting in less income and more expenses?
• Are creditors threatening to sue you?
• Is your paycheck being garnished or about to be garnished?
• Are you behind on car or house payments?
• Have you defaulted on any credit card debt?

If you answered yes to some of these questions, bankruptcy could be the right solution for you. Don’t continue to put things off until your situation gets even worse. Take charge right now.

PROS

• There are two major advantages of filing for personal bankruptcy. They are eliminating calls from creditors, at all hours of the day and protecting your property.

• Once you have officially filed for bankruptcy your creditors can no longer contact you in regard to your unpaid debts, nor can they legally attach your wages. They must, instead, abide by federal bankruptcy law and attempt to obtain reimbursement.

• Filing for personal bankruptcy immediately puts a stop to events such as utility shut-offs, evictions, repossessions and many types of lawsuits. A word of warning if you’re involved in a lawsuit that may result in you paying financial damages, wait until after the lawsuit to file. For individuals who have been constantly struggling to stay afloat, this is a relief beyond compare.

CONS

• Personal bankruptcy is not the only alternative to getting out from under mountains of debt. Consider it a last resort. It will follow you for ten years on your credit report and forever as a federal court document. Court documents are open to the public.

• Many job applications ask if you’ve ever declared bankruptcy, even if it’s been discharged years ago you still have to answer yes

Property protection is important. In the majority of personal bankruptcy cases debtors are allowed to retain property such as their residence and automobile. Unfortunately, many individuals ignore the option of filing for bankruptcy because they are under the mistaken impression that they will lose everything. This action will sometimes give you the advantage over the creditors who continuously contact you for payment, as well. Since they are responsible for obtaining their own legal representation when attending the meeting of creditors, many times they will write off the debt in lieu of paying for an attorney.

Before taking that final step look at other methods of reducing your debt. Call your creditors and see if they’ll accept a lesser amount to pay off a debt in full. Cut back on expenses that aren’t necessary. Perhaps you could give up your afternoon gourmet coffee drink or pack your lunch instead of going out to lunch. Sell assets and use the proceeds to pay down debt. Even consider a part time job.

To qualify for a Chapter 7 bankruptcy, see if you pass the “means test.”

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