Determining whether bankruptcy is the right choice for you might be the toughest decision of your life. Though the consequences of bankruptcy are long-lasting, for many it is the best option for ending financial hardship. What questions do you need to ask yourself if you are debating filing for bankruptcy?
What is My Current Employment Situation?
Are you unemployed? Are you working, but underemployed? Filing for bankruptcy might be your best option because employment is not something that changes your financial situation quickly. Even if you are in the process of searching for work, you might wait months before receiving an offer and establishing ongoing cash flow again. Calculate your income and compare it to your debt. If your income has been consistently low for at least six months and you believe it will continue to be so for at least another two to three months, bankruptcy could save you from further financial damage.
If I Never Used a Credit Card Again, How Long Would It Take for Me to Pay Off My Current Debt?
Many people in financial hardship are to the point where they are no longer using credit cards. Unfortunately, the problem might be so bad that no longer using credit does little good in the short-run. Calculate how long it will take to pay off debt once you are no longer charging purchases. If you are looking at five years or more to pay back your debt, bankruptcy could be the best solution. Chapter 13 bankruptcy repayment plans take as long as five years, so you might as well commit to a controlled repayment plan that helps you avoid interest and protect important assets like your home if you will be paying for that long anyway.
Are You Facing Foreclosure or Repossession?
Speaking of your home, if you are receiving threats from the bank concerning your mortgage or car payments, bankruptcy can help. Filing for bankruptcy creates an automatic stay, stopping collection efforts and giving you a chance to get organized and stay in your home. Bankruptcy can also extend the time you have to pay off a car loan.
Are You Facing a Lawsuit?
The automatic stay created by bankruptcy can also affect lawsuits. In order for a lawsuit to be successful against someone filing for bankruptcy, the complaining party must request permission from the court to pursue the lawsuit. If the debt will be discharged in a bankruptcy it is unlikely the request will be granted and in most cases, the lawsuit will be dismissed.
What Types of Debts Do You Have?
Not all debt is dischargeable in a bankruptcy. For instance, back child support payments must be paid regardless of bankruptcy. Student loan debt is usually not dischargeable in a Chapter 7 bankruptcy. Income tax debt can be eliminated, but only if it is more than three years old. A bankruptcy attorney can explain how a bankruptcy filing will affect your specific types of debt, so be sure to carefully consider your situation when determining if bankruptcy is right for you.
If you are sinking financially, bankruptcy could be the right option for you. It is important to consider a variety of factors and to speak with a bankruptcy expert about your situation. If you would like to learn more, contact the Law Offices of Robert M. Geller at 813.254.5696 for more information.