Bankruptcy, Is It Right for You?

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The mere thought of filing bankruptcy causes panic, fear and stress. Many people have never considered it as an option but due to the economic crisis and outrageous unemployment rates it looms in the background of our minds. Should I shouldn’t I, will it help or hurt me?

Every situation is unique and there are no blanket right answers. However there are things you should consider when making the decision for yourself.

As stressful as overwhelming debt can be, deciding upon bankruptcy has to include careful consideration of the kind of debt you have. Realizing that there are some debts that cannot be discharged in a bankruptcy could help make up your mind.

Debts like past due taxes, child support, and student loans can rarely if ever be eliminated or discharged in a bankruptcy. These debts will remain until you pay them off regardless. They simply won’t go away! If these are the crux of your debt you would be wise to make contact and let them know your current financial struggle. Try to work out payment arrangements and show a sincere desire to meet these responsibilities. Being proactive can go a long way towards influencing cooperation with these creditors. When they don’t hear from you and do not receive payments, they will be forced to start collection activities. Your lack of contact sends the message that you do not want to pay or to explain your situation. Be proactive!

There are different types of bankruptcy cases. Chapter 7 eliminates certain kinds of debt, while Chapter 13 only consolidates your debt and often times can reduce or eliminate interest charges but you will end up paying your debts. Typically the debts eliminated in a chapter 7 case are unsecured, such as credit card debt. Chapter 7 cases also include some secured debt, such as an auto loan or mortgage. Be aware however, that if you want these debts eliminated, you will in most cases have to surrender the car and the house.

You should also be aware that bankruptcy remains on your credit report for 7-10 years (usually 10). Obviously having this on your report will seriously impact your credit score. Consider this carefully when deciding how to proceed. Ten years is a long time and your life could change dramatically between now and then!

Your best course of action is to contact a bankruptcy attorney. The majority will meet with you for a consultation free of charge. They can review your debts and advise you as to how to proceed. They can tell you which debts can be eliminated and which will not be included. They can also help you decide if you want to file a chapter 7 or 13 case. They will do all of this on your first free consultation, so it is worth your time!

Whatever you decide to do, realize that you are not alone! Millions of Americans are struggling with this same decision right now. If you do choose bankruptcy it does not make you a bad person! The stigma of years gone by is gone as the number of bankruptcy cases continues to increase. The choice is yours; just take the time to explore your options before jumping in with both feet!