Current economic conditions are causing a lot of people who have never before thought about filing bankruptcy to now look at it as a workable answer to their financial troubles. The problem is that not everyone can be helped 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 help you or not.
Should You Even Be Thinking About Filing Bankruptcy?
As odd as it sounds, there's no comprehensive test you can take to see whether bankruptcy is right for you. You don't need a particular level of debt. You don't need to earn less than a certain amount 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 marking off boxes on a flow chart. Bankruptcy is an individual decision. But, it's a individual decision that's founded on specific factors in your life. They are some of the things you need to look at 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 trouble paying the minimum payments on your credit cards. And, if you're barely able to keep necessaries like food, clothing and shelter you're probably in financial distress.
2. Do you live paycheck to paycheck? If you had even a small health issue, 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 indebtednesses? 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 consider is that your current bad situation may, and in all likelihood will, improve in the future. If it does, those judgments that were of no interest during your financial crisis will interest you because you could be looking at 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 harassing you? Bankruptcy is one choice to halt that harassment. But, you can also stop it with a letter writing campaign under the federal Fair Debt Collection Practices Act and assorted state law fair debt collection laws. But, bankruptcy is likely the best choice if you're being harassed 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 lets you to restructure your debts and pay your mortgage arrears over time.
Will Bankruptcy Assist You?
Bankruptcy won't give you more income. So, if you don't make adequate money to support your life-style, bankruptcy isn't your answer. 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 primary debts are non-dischargeable debts. Bankruptcy law defines those debts that are dischargeable and those that are not. The following is a short list of such non-dischargeable debts in a Chapter 7 Bankruptcy under current bankruptcy laws.
* Current taxes and government penalties
* Your Child Support
* Criminal fines or court ordered restitution
* Personal injury awards where the debtor was drunk at the time of the incident
* Debts that aren't listed in the bankruptcy filing schedule
* Student loans (there are exceptions but it's nearly impossible to meet the prerequisites for them. So, it's advisable to consider student loans as non-dischargeable)
* Debts that were part of a previous bankruptcy case and that weren't discharged
Closing Considerations for Personal Bankruptcy
Making Up One's Mind whether to file bankruptcy isn't an uncomplicated decision. But, it's a decision you'll be able to make if you take a reasoned and well-balanced approach to it. As part of your consideration, you'll need to consider your emotions, your background, your religious beliefs and your values. So, look at the following:
1. Do your own research. Learn everything you can about bankruptcy.
2. Keep your future in mind. Think of how you'll feel when the case is all over and you're out from under a stack 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 attorney for you. Nearly all attorneys will give you a free bankruptcy consultation. Use that free consultation to interview the lawyer. But, when you start questioning bankruptcy lawyers, don't base your final hiring decision totally on price. It will be enticing to employ the most low-priced. After all, you're in a financial crisis so the more inexpensive 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 whole 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 help 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 believing it's not. But, you do have to make the decision that's best for you and your household. So ask yourself: "Is it more respectable to fight 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 permit you to devote your personal time and effort into activities that will more positively impact 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 made that decision, have faith in your power to make the appropriate choice. Then, go ahead knowing that your financial troubles will soon pass.
Should You Even Be Thinking About Filing Bankruptcy?
As odd as it sounds, there's no comprehensive test you can take to see whether bankruptcy is right for you. You don't need a particular level of debt. You don't need to earn less than a certain amount 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 marking off boxes on a flow chart. Bankruptcy is an individual decision. But, it's a individual decision that's founded on specific factors in your life. They are some of the things you need to look at 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 trouble paying the minimum payments on your credit cards. And, if you're barely able to keep necessaries like food, clothing and shelter you're probably in financial distress.
2. Do you live paycheck to paycheck? If you had even a small health issue, 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 indebtednesses? 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 consider is that your current bad situation may, and in all likelihood will, improve in the future. If it does, those judgments that were of no interest during your financial crisis will interest you because you could be looking at 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 harassing you? Bankruptcy is one choice to halt that harassment. But, you can also stop it with a letter writing campaign under the federal Fair Debt Collection Practices Act and assorted state law fair debt collection laws. But, bankruptcy is likely the best choice if you're being harassed 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 lets you to restructure your debts and pay your mortgage arrears over time.
Will Bankruptcy Assist You?
Bankruptcy won't give you more income. So, if you don't make adequate money to support your life-style, bankruptcy isn't your answer. 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 primary debts are non-dischargeable debts. Bankruptcy law defines those debts that are dischargeable and those that are not. The following is a short list of such non-dischargeable debts in a Chapter 7 Bankruptcy under current bankruptcy laws.
* Current taxes and government penalties
* Your Child Support
* Criminal fines or court ordered restitution
* Personal injury awards where the debtor was drunk at the time of the incident
* Debts that aren't listed in the bankruptcy filing schedule
* Student loans (there are exceptions but it's nearly impossible to meet the prerequisites for them. So, it's advisable to consider student loans as non-dischargeable)
* Debts that were part of a previous bankruptcy case and that weren't discharged
Closing Considerations for Personal Bankruptcy
Making Up One's Mind whether to file bankruptcy isn't an uncomplicated decision. But, it's a decision you'll be able to make if you take a reasoned and well-balanced approach to it. As part of your consideration, you'll need to consider your emotions, your background, your religious beliefs and your values. So, look at the following:
1. Do your own research. Learn everything you can about bankruptcy.
2. Keep your future in mind. Think of how you'll feel when the case is all over and you're out from under a stack 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 attorney for you. Nearly all attorneys will give you a free bankruptcy consultation. Use that free consultation to interview the lawyer. But, when you start questioning bankruptcy lawyers, don't base your final hiring decision totally on price. It will be enticing to employ the most low-priced. After all, you're in a financial crisis so the more inexpensive 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 whole 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 help 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 believing it's not. But, you do have to make the decision that's best for you and your household. So ask yourself: "Is it more respectable to fight 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 permit you to devote your personal time and effort into activities that will more positively impact 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 made that decision, have faith in your power to make the appropriate choice. Then, go ahead knowing that your financial troubles will soon pass.
About the Author:
Harvey L. Cox is an attorney, mediator and author. Visit his legal education sites to learn more about your legal rights. Learn about your rights as a judgment creditor at Texas Judgment Collection Center. Learn more about Bankruptcy Law at The Bankruptcy Law Info Center. And, learn more about general legal issues at NoLegalese.com.
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