Making the decision to file for bankruptcy will probably be one of the biggest financial decisions of your life. It does not, however, have to be a negative decision. Nor does it have to be a decision that you make alone, without the proper insight that can be provided by an experienced bankruptcy attorney. Your bankruptcy attorney should be able to provide you with an unemotional view of your financial situation and a coherent plan to remedy it. In fact, given a little guidance, this can be a step in the right direction. It could be “Tabula Rasa”, a clean slate when it comes to your financial situation. Therefore, what are some key things that you may want to consider when making this decision?
- Consider the type of debts you have and how they were accrued.
- What is your ultimate goal in petitioning for bankruptcy? Bankruptcy cannot eliminate certain kinds of debt so be sure you know your ultimate goal.
- Do you qualify for Chapter 7 or Chapter 13 Bankruptcy? Both Chapter 7 and Chapter 13 bankruptcy have certain eligibility requirements. To qualify for Chapter 7 bankruptcy, your income must be low enough to pass the dreaded bankruptcy means test. To be eligible for Chapter 13 bankruptcy, the amount of your total debt cannot exceed a certain dollar amount.
- Should you choose Chapter 7 or Chapter 13 for your financial needs? Whether it is in your best interest to file for Chapter 7 or Chapter 13 bankruptcy depends on numerous factors including:
the types of debts you owe, your income and expenses, whether you own any nonexempt property and what you hope to achieve by filing for bankruptcy.
- What other options exist other than bankruptcy? Can you afford to repay debts, restructure loans, increase earnings, or even reduce spending? Should you bother?
- Do your homework on what debts will be discharged versus those that will not before you think that bankruptcy is the end-all-be-all fix panacea.
- Discuss with a bankruptcy attorney what will happen to items such as your pension, insurance, co-signers for loans and personal property such as cars and property holdings.
The important thing is not to panic and get good advice from an experienced attorney who can look at your unique situation and help you decide what will be best for you and your family. It may not be easy to think this way, but in reality, all you are dealing with in this unfortunate situation is money. Life will go on regardless.