Filing for bankruptcy is a major decision that requires careful consideration. While bankruptcy can provide financial relief, it has to be the right choice for your unique circumstances.
Here are three questions to ask yourself while determining whether or not bankruptcy is a viable option.
What types of debts do you have?
It’s important to remember that not all debts can be discharged through bankruptcy. If your debts are mainly credit cards, medical expenses, and personal loans, then bankruptcy may be a viable option. However, if you owe substantial back taxes and child support obligations, then bankruptcy may not be the best strategy.
One thing that can help is to make a list of all your debts. This allows you to prioritize them and build a clearer picture of your financial circumstances. Understanding what can and cannot be discharged is crucial in assessing whether bankruptcy aligns with your needs.
What are your income and expenses?
Filing for Chapter 7 bankruptcy generally means passing a means test. To be eligible, your income must fall below a certain threshold.
Chapter 13 bankruptcy involves assessing your income and creating an affordable repayment plan to cover some of your debts over time. Having a clear understanding of your income and expenses is essential to determine which type of bankruptcy might work for you.
What are the alternatives?
Bankruptcy isn’t the only way to resolve financial difficulties. You may be able to settle on a repayment plan directly with creditors. Alternatively, you could consolidate your debts into one manageable payment. Exploring these alternatives thoroughly can help you decide if bankruptcy is truly necessary.
To explore your options in more detail and learn about bankruptcy, it may help to seek some legal guidance.
