Nobody ever wants to file for bankruptcy. However, when your debt spirals out of control to the point where you can no longer manage it, filing for bankruptcy can provide a welcome relief and the opportunity to start over.
That’s not to say the bankruptcy process is easy. It’s a long, stressful process and there is no guarantee that it provides the happy outcome you hope for.
Because of this, it’s always important to ask yourself these 4 questions before filing for bankruptcy:
Are There No Other Options to Clear My Debt?
Before filing you need to ask yourself whether there are other options available. For example, if you are swimming in credit card debt, have you explored the possibility of a debt repayment plan with your lender? If its medical bills, are there are any options for extending repayments?
Also, be sure to review your income and spending to see if you can create a budget that allows for debt repayments. Perhaps consider getting some part-time work or selling some assets – there are many options worth trying before you decide to file for bankruptcy
Can I Afford to File for Bankruptcy?
An overlooked aspect of filing for bankruptcy is the fact that it costs money to do so. Yes, this is certainly counterintuitive considering the financial situation of anyone that files for bankruptcy but its unfortunately an unavoidable part of this process.
So, you need to ask yourself whether you can even afford to file for bankruptcy. It’ll cost several hundred dollars just to file, not to mention attorney fees you’ll need to pay throughout the filing.
Will All My Debt Be Cleared by Filing for Bankruptcy?
Not everyone realizes that filing for bankruptcy doesn’t mean all debts are discharged. For example, filing for Chapter 7 or Chapter 13 bankruptcy will not discharge student loan debt, so if this is your major source of debt then filing may not be the best choice.
Other types of debt that cannot be discharged included child support and alimony, and various forms of secured debt. Debts that can be cleared by filing for bankruptcy include medical bills, credit card debt, and personal loans.
Think about the types of debts that you are dealing with and whether these will be cleared from declaring bankruptcy!
How Will Bankruptcy Affect My Future?
While the present may seem bleak due to your debt, it is important to ask yourself whether you are prepared for the future consequences of going bankrupt. Yes, it will clear various types of debts but this doesn’t mean it’s all rosy.
For instance, Chapter 7 bankruptcy remains on your credit report for ten years after you file. This will have a huge impact on your personal finances, as you may not be able to get financing for things like a car, house, or a personal loan.
It’s also on public record, so anyone can find out that you’ve declared bankruptcy. Take a long hard think about how bankruptcy will affect your future and whether these consequences are worth clearing your present debt.
The Travis Law Firm provides professional legal representation for Chapter 7 & Chapter 13 bankruptcy services for residents of all cities in Riverside and San Bernardino Counties. We have offices in Riverside, San Bernardino, Victorville, Temecula, Cathedral City and Ontario for the convenience of our Inland Empire, High Desert, and Coachella Valley clients. For more information about our bankruptcy law services and other legal representation, call us today at 1-800-BANKRUPT or (951) 274-9501.