Should I File Bankruptcy?
Should I File Bankruptcy?
Although bankruptcy is available to most people, the majority of people burn through all of their savings and retirements, possibly lose cars and or houses before they turn to bankruptcy. However, had they considered bankruptcy when times first got tough, they may have been able to preserve some of those items. Bankruptcy is something that is not the best decision for everyone; depending on your debt, your income, assets, etc. There are many pros and cons to bankruptcy, most of which are not the same for every person. Since no two people have the exact same situation, this article cannot determine whether you should file for bankruptcy it gives you things to consider in determining what is best for you and your situation.
The most common advantage of filing for bankruptcy is that it can discharge many of your debts. Discharging your debts means that the debts are forgiven and you are therefore no longer responsible for them. If you have gotten into a situation where you are unable to pay your bills you may be eligible for file bankruptcy and have all of the debts discharged. Even if you are not eligible for a Chapter 7, you may be able to file a Chapter 13 which provides for reorganization of the debts into one monthly payment over 5 years.
Another advantage to bankruptcy is the automatic stay that is put in place. This means that your creditors cannot contact you to collect a debt, they cannot file suits against you, call you, sent you letters, garnish your wages, etc. An additional benefit that is a misconception of bankruptcy is that you do in fact get to keep most of your personal property. There are state and federal bankruptcy exemptions that are sued to protect assets that the bankruptcy trustee cannot liquidate for the benefit of your creditors. The exemptions include protection of clothes, jewelry, car, house, etc. depending on the value of the items.
A con or disadvantage to filing bankruptcy is that there is so debt that does not go away in the bankruptcy. Some of the debts that will remain after the bankruptcy include most recent back taxes, student loans, alimony and child support and fines owed to government agencies. However, the advice of a bankruptcy attorney can help determine if the taxes are dischargeable. Depending on the year the taxes are owed for and when the taxes were filed, they may be dischargeable provided that they do not have a lien on any property that you own. However, even though these debts are remaining, wiping out the other unsecured debt can help free up funds such that you may be able to afford to pay back the non-dischargeable debt.