If you’re considering filing for bankruptcy, it’s important to know what you’re getting into. What questions should you ask before filing for bankruptcy?
The bankruptcy process is not easy. Filing has a major impact on your financial future. To make sure that bankruptcy is the right decision for you, you must do a bit of self-reflection. It’s also important to understand all of your options before you file.
Here are five questions to ask before filing for bankruptcy. A bankruptcy lawyer may also be able to help you better understand your options and whether or not bankruptcy is the best choice for you.
1. How Much Debt Do You Have?
This is the first and most important question to answer before deciding to file for bankruptcy. You need to know exactly how much money you owe so that you can decide which type of bankruptcy is right for you.
If you have a large amount of debt, you may need to file for Chapter 7 bankruptcy, which involves selling off some of your assets to repay your debts. If you have a smaller amount of debt, you may be able to file for Chapter 13 bankruptcy, which involves repaying your debts over time.
2. Can You Repay Your Debt in a Reasonable Amount of Time?
If you can’t repay your debt within a few years, bankruptcy may be the best option for you. Trying to repay a large amount of debt can be incredibly stressful. It strains every area of your life.
If you’re in dire financial straits but bankruptcy is not an option, there are other programs available that can help you get out of debt. This includes credit counseling or a debt management program.
3. What are Your Assets?
When you file for bankruptcy, some of your assets may be sold off to repay your debts. However, certain assets are exempt from being liquidated by the court. These exempt assets vary from state to state, but they typically include things like your car, your home, and your retirement savings.
4. What are Your Current Income and Expenses?
Another important factor to consider before filing for bankruptcy is your current income and expenses. You need to make sure that after paying for all of your necessary living expenses, you will still have enough money left over each month to make payments towards your debts. If not, then filing for bankruptcy may not be the right option for you at this time.
5. What Caused Your Financial Problems?
Finally, it’s important to ask yourself what caused your financial problems in the first place. If it’s something over which you had control, you should do your best to avoid making the same choices in the future.
- Did you rack up too much credit card debt?
- Did you take out too many loans?
- Did you lose your job?
Once you know what caused your financial problems, you can take steps to avoid those same mistakes in the future and keep yourself from having to file for bankruptcy again down the road.