Is Bankruptcy The Right Answer For You?

Many people thought that filing for bankruptcy is the easy way out from a debt crisis but in reality, it is not. For one, bankruptcy does not simply erase debts as it only stops your creditors from collecting debts directly from you. Rather, you will surrender all your financial operations to the bankruptcy court handling your case, and it will ensure your creditors are being paid. Moreover, navigating through the filing and process of bankruptcy will be tedious and confusing. Here are some of the signs that bankruptcy is the right answer for you.

Downsizing and Debt Management

Needless to say, filing for bankruptcy should be the last option for clearing your debts. Other alternatives would be debt management and downsizing. One way to manage your debt is to negotiate with your lenders especially if you're experiencing just a temporary financial setback such as a short-term disability that hinders you from earning a stable income. You can also downsize by selling your car and some of your properties, and moving to a city with a lower cost of living so that you can allocate more money to pay your debts. If you have already exhausted all these alternatives, then you might be ready for bankruptcy.

Consulting a Bankruptcy Attorney

Another way to know if bankruptcy is right for you is to consult a bankruptcy attorney. A bankruptcy attorney will show you how to calculate your income, expenses, and assets vis-à-vis your outstanding debts. He can also refer you to a credit counseling program — a requirement for all bankruptcy filing. Afterward, the bankruptcy attorney will be able to help you identify if bankruptcy is the right option for you and which type of bankruptcy is suitable for your needs.

Preparing for the Consequences

Ultimately, you also have to prepare for the positive and negative consequences of bankruptcy. On a positive note, you will be protected by bankruptcy court against debt collectors from collecting debts (credit cards and medical bills) with exceptions such as child support, taxes, and mortgages. The negative side of filing bankruptcy will be on your credit standing.

However, there are negative consequences such as losing your privacy because your financial records are accessible to the public and possibly losing some of your properties that you might have otherwise spared from being sold to pay for your debts. If you're prepared for these consequences, then bankruptcy might be a good option for you.

Bankruptcy application needs a serious pondering since this is not for everyone even though it can present a fresh start to others. Yet, you need to consider other alternatives, consult a bankruptcy attorney and be prepared for the positive and negative consequences to know whether bankruptcy is right for you.

For more information, contact a law office like The Gil Law Firm.


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