The decision on whether or not to file some sort of bankruptcy is a big one and it will affect your finances and credit for years to come. And although the number of bankruptcies filed has been dropping in recent years, there were still over 800,000 filed in the year 2016 in the U.S.
But how do you know if you should be filing for bankruptcy? If you feel like your bills and/or debt is just too much for you to handle currently, you may want to consider it. But before you decide, there are a few more questions you should ask yourself.
Will Bankruptcy Help Your Situation?
It may seem like a simple and obvious question, but you really have to be sure that where you see yourself after bankruptcy is a better place than where you are now. As mentioned, bankruptcy will have a major impact on many aspects of your life; make sure you know what you want to accomplish and have clear goals for where you want your life to be after bankruptcy, if you choose to go that route.
Is There Another Way?
Because it has such a major effect on your finances, bankruptcy should be considered a last resort. Is there another way to get out of the financial hole that you are in? Can you work more, maybe get another job? Reduce your expenses? Can any of your debts be refinanced? What if you created and stuck to a budget?
Do You Qualify?
While things may seem bleak from your perspective, there are eligibility requirements when it comes to filing for bankruptcy. For example, whether you are eligible for bankruptcy depends heavily on income (for filing Chapter 7) and the amount of debt you owe (for filing Chapter 13).
Should You File Chapter 7 or Chapter 13?
The vast majority of bankruptcy filings in the U.S. are of the Chapter 7 variety. The process is much shorter (3 to 6 months) and involves the liquidation of some property to pay debts, while much of your other debt is wiped away. If your income is nowhere near enough to meet your debt obligations, Chapter 7 may be an option. To be sure, your credit will take a major hit and it will take you years to rebuild it, but if you can see yourself in a better position after bankruptcy filing, then it might be something to consider.
Chapter 13 bankruptcy is a longer process (3 to 5 years) and is used by those who have enough income to pay their debts; they just need time. Chapter 13 can delay debts and foreclosures and give you time to catch up on your payments.
Other Things to Consider
Before you decide to start the bankruptcy process, there are other things to consider. What debts would be paid off? What will happen to your property? Will going through the process be beneficial when is all said and done?
It’s a lot to figure out and if you have questions about filing for bankruptcy in the Orlando area, contact the attorneys at Badgley Law Group or call 407-781-0420 for a consultation.