Current economic circumstances are causing a lot of people who have never before considered filing bankruptcy to now look at it as a possible answer to their financial difficulties. The problem is that not everyone can be assisted by filing bankruptcy. So, if you’re one of those individuals 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 Considering Filing Bankruptcy?
As funny as it sounds, there’s no general test you can take to find out whether bankruptcy is okay for you. You don’t need a certain level of debt. You don’t need to earn less than a particular sum 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 checking off boxes on a flow chart. Bankruptcy is a personal decision. But, it’s a individual decision that’s based on specific 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 scarcely 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 moderate health problem, would it put 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 liabilities? You may not need to file bankruptcy if you’re judgment proof. Then again, judgments do stick around for a while. Each state’s judgment rules 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 in all likelihood will, improve in the future. If it does, those judgments that were of no concern during your financial trouble will interest you because you could face 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 choice to end that harassment. But, you may also terminate it with a letter writing campaign under the federal Fair Debt Collection Practices Act and miscellaneous state law fair debt collection laws. But, bankruptcy is likely the easiest alternative 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 earn enough money to support your life-style, bankruptcy isn’t your solution. 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 brief listing of many 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 intoxicated at the time of the incident
* Debts that aren’t named in the bankruptcy filing schedule
* Student loans (there are exceptions but it’s almost impossible to meet the requirements for them. So, it’s advisable to construe 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 take a sound and well-balanced approach to it. As part of your consideration, you’ll need to consider your emotions, your background, your spiritual beliefs and your values. So, consider the following:
1. Do your own research. Read everything you can about bankruptcy. A marvelous resource for training 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 concluded 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 delighted with your choice to either file bankruptcy or not file bankruptcy?
3. Find the correct bankruptcy lawyer for you. A good place to find bankruptcy attorneys in your area is Legal Match. Most bankruptcy attorneys will give you a free bankruptcy consultation. Use that free consultation to question the lawyer. But, when you start questioning bankruptcy attorneys, don’t base your final hiring decision solely on price. It will be tempting to employ the most low-priced. After all, you’re in a financial crisis so the more bargain-priced the better, right? That’s not always the case. Question 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 comprehensive approach to your case. You need to feel good about the fundamental interactions you have with the lawyer and staff. You want a bankruptcy lawyer who will assist you through this crisis in a positive way. You don’t want to feel judgment or disapproval from either the lawyer or the staff.
4. Filing bankruptcy is a moral decision. Don’t kid yourself into thinking it’s not. But, you do have to make the decision that’s best for you and your family. So ask yourself: “Is it more honorable to push a losing financial battle that places your family’s future at risk in an attempt to pay back old debt?” Or, is it more respectable to admit you did your best, you couldn’t make it work and you need a fresh start that will allow you to devote your personal time and effort into activities that will more positively affect your family’s future?”
Only you can answer that question. Take your time. Make the right decision for you and your household. Once you’ve come to that decision, trust in your power to make the appropriate choice. Then, go ahead knowing that your financial crisis will soon give way.
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21 comments
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September 6, 2010 at 3:51 pm (UTC -6)
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Kathrin Fleshlight says:
August 11, 2010 at 4:19 am (UTC -6)
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