November 24, 2017

How to Decide Whether Bankruptcy is Right for You

There are financial and emotional reasons to seek bankruptcy protection. Let’s consider both categories.

Financial questions to ask yourself
  • Are you able to make more than a minimal payment on your debts every month?
  • How many times in the last year have you been late or skipped a payment on a debt?
  • What is your total debt relative to your annual income? The higher your debt to annual income, the more difficult it will be to pay off over time.
  • Can you realistically pay your debt completely over a reasonable amount of time given your current earnings?
  • What type of debt do you struggle to pay? Credit card and other unsecured debt can be eliminated in bankruptcy, student loans and child support cannot.
  • Are you using credit cards to pay off other credit cards?
  • Are you going to payday loans to make it through till next payday?
  • Are you able to save anything on a monthly basis? Do you have any savings at all?
  • Are you worried about your credit rating?  Bankruptcy hurts your credit record, but if you’re not making payments on time or regularly, it’s already taken a hit.
  • What are your other options? Seriously…what are they?
  • Are you current on the house payment?  The car payment? Is there a chance one of them will soon be paid so that you can direct those funds to your other debts?
  • Do you own significant assets? This will be a factor we consider in a bankruptcy counseling session.
  • Are your income tax refunds being retained to pay taxes from prior years?

Emotional considerations

  • Are you losing sleep, experiencing heart burn or elevated blood pressure since your financial hardships set in?
  • Is your relationship with family and significant others suffering?
  • Has your work performance changed? Has anyone at work said you are more difficult to deal with?
  • How often to you find yourself obsessing over your financial position?
  • Are you fielding calls from creditors on a daily basis?

The first step

If these questions make you uncomfortable we suggest it’s time to meet with a bankruptcy attorney for a preliminary bankruptcy counseling session.
I’ve been helping  clients through financial hardship for over 30 years. I’ve seen clients rebuild their lives after getting the fresh start that bankruptcy provides.  It is only money.