Should I file for bankruptcy? This is one of the most asked questions among people in financial distress who owe more than what they can pay. If you are in the same situation, don’t consider filing bankruptcy as a dangerous option. In fact, a bankruptcy petition may give you the faster route to debt relief as compared to emptying your savings and finances. There are several types of bankruptcy available depending on your situation.

Before filing bankruptcy, make sure to conduct an evaluation of your financial condition. To get you started in your personal assessment, here are some answers to the most frequently asked questions of debtors considering bankruptcy: 

  • Are you experiencing creditor harassment?

When loan payments are missed, creditors may constantly give you demands through calls, visits, or even lawsuits. Evading those you owe is not the preferred option as there may be legal consequences. When you file for bankruptcy, you can attain relief from those harassing you because of the “automatic stay” that the bankruptcy court will issue. This order shall temporarily put all collection activities on hold, allowing a debtor some distance from the stress.

  • Do you have credit card debt or outstanding balances in your personal accounts?

When a credit card is the only way you are able to pay for basic necessities, then bankruptcy presents as a good option. You may want to consider Chapter 7 which is casually referred to as straight bankruptcy. Declaring Chapter 7 bankruptcy will liquidate your remaining assets to pay off your loans to banks and credit card companies.

  • Do you feel that your finances are spinning out of control?

should I file bankruptcyFor those whose medical expenses and personal loans are piling up continually, choosing bankruptcy becomes an easy option especially when there is no reliable source of income due to unemployment or other reasons. Likewise, losing track of all monthly payments owed over an extended period of time is often another indicator to declare bankruptcy and put a halt on your running debt total. A bankruptcy lawyer may enlighten you on how bankruptcy petitions may help you regain control of your finances.

  • Do you have liquid assets and properties?

Your assets include motor vehicles, savings, and other accounts, retirement funds, stocks, and bonds, or real estate. Having any of these in your possession can help you get out of insolvency as these are key determinants for qualifying under Chapter 7 bankruptcy. If you are unable to pay loans with your current or projected future income, Chapter 7 is a good choice since you can expect to receive a debt discharge notice from the court in less than four months after filing bankruptcy. The downside here is that almost all of your nonexempt property will be sold off and the record of being bankrupt will reflect on your credit report, thereby hurting your credit score in the next ten years.

Debtors who own valuable personal assets such as a company or home, and have consistent annual income, may choose bankruptcy Chapter 13 instead, also known as a reorganization bankruptcy. Under this type, they may keep their properties but will need a repayment plan specifying how they will be paying off their debts in the next three to five years. 

Evaluating Your Financial Circumstances

An affirmative response to any of the five questions raised above indicates the need for a more in-depth financial scanning. This means that it is time to collect all the loans, utility bills, credit statements, or mortgages piling up to get your running total on personal debts. Then, try to subtract the total amount owed to the estimated value of the assets in your possession. If there  is a large deficit, then you may consider declaring bankruptcy with the court to help you bridge the gap. 

Are you considering filing for bankruptcy? We are here to help you!

At first, it may be difficult to admit how deep in debt you are. This is why the bankruptcy law was created – to protect your best interest. If you have a lingering desire to wipe your financial slate clean, then it may be the best time to face the next question “How should I file for bankruptcy?”. 

Once you voluntarily file for bankruptcy, you will need to consult with credible bankruptcy lawyers to weigh all your options and determine the best type of bankruptcy that applies to you. Having a good bankruptcy attorney and the right legal knowledge on bankruptcy laws are essential to a seamless bankruptcy process. A well-planned and organized bankruptcy filing has a higher chance of getting your debts discharged, giving you a better chance of putting an end to your financial problems. 

Ready? Receive a free consultation from one of our experienced bankruptcy attorneys through Northwest Debt Relief Law Firm and take the first step toward a fresh start.