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Should You File for Bankruptcy?

Tags: bankruptcy

Most people face the economic downturn the best they can; however, we know that over 70 percent of Americans live paycheck-to-paycheck. Having the weight and stress of extreme debt on your mind and affecting your personal and family life may be too much for some people. So, if you racked up more debt than you can pay, especially with job instability, you may be asking yourself, ‘should I file for bankruptcy?’

What most people don’t understand is that bankruptcy is not a clean slate to start over. Yes, you will have some of your debt taken care of in bankruptcy. However, not everything is dischargeable in bankruptcy, and it will have long-term effects on your life after you complete your bankruptcy hearing.

Reasons to Avoid Bankruptcy

Bankruptcy has lasting effects; you need to understand how bankruptcy can influence your life before deciding to go forward and declare bankruptcy.

  1. Bankruptcy Costs Money – It might seem funny that the process to discharge debt would charge money, but it does. Depending on the depth of your financial problems filing for bankruptcy could cost between $1,500 and $4,000.
  2. Bankruptcy Sticks with You – after you declare bankruptcy, it could remain on your credit report for either 7 or 10 years, depending on whether you file for Chapter 7 bankruptcy or Chapter 13.
  3. Lending Opportunities will be Hard to Find – suppose you need a car three years after you declare bankruptcy. You may find it challenging to find a bank or credit union that will lend to you for the simple fact that repayment is not a guarantee from you.

Reasons You Should Consider Bankruptcy

Bankruptcy is often a last resort option for most people. However, if you had tried other alternatives, bankruptcy may be your best chance of getting your life back. Look at the following scenarios to determine your best options.

  1. You have put yourself on a budget – if you have put yourself on a strict budget, cut out any extra spending, and taken on an additional job, but still, your creditors are calling, then bankruptcy could be a good option for you.
  2. Negotiating with creditors is not an option – if you have already tried to reach out to your creditors and they refuse to work with you to arrange your payment plan or to defer payments, then you may not have a choice but to file for bankruptcy.
  3. Your debt exceeds your income and assets – if you add up your income and assets, then subtract your debt and the total is far into the negative, you may want to consider filing for bankruptcy.

Be Aware

You should be aware of the following items that may affect your choice of filing for bankruptcy.

  1. Depending on the type of bankruptcy that you file, you have a chance of losing personal property in the process.
  2. You are not able to discharge government student loans.
  3. You will have to rebuild your credit from the ground up slowly.

The post Should You File for Bankruptcy? appeared first on My Journey Rocks.

This post first appeared on My Journey Rocks, please read the originial post: here

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Should You File for Bankruptcy?


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