Should I File For Bankruptcy?
Making the decision to file (or not to file) bankruptcy could possibly be one of the biggest financial decisions you will make in your life. It is imperative that you thoroughly research the bankruptcy process, including alternatives to filing for bankruptcy, before making this decision. If you do decide to file for bankruptcy it could be the first step on the road to financial recovery. Financial recovery is the ultimate goal of everyone who files for bankruptcy. By spending time researching bankruptcy thoroughly prior to filing you have ensured that this path to financial recovery will be a smooth one.
There are many feelings that individuals considering a bankruptcy petition may go through; ranging from anxiety to depression. These are all normal but it is important to know that the bankruptcy protection is there for a reason. Life is full of unexpected events from unplanned medical bills to sudden loss of employment and the bankruptcy code is there to assist individuals who have a genuine need for help with regards to their financial situation.
There are a few things you should research prior to deciding to file for bankruptcy. The first thing to look at is the many alternatives to filing for bankruptcy. Some long-time homeowners who have substantial equity in their homes choose to take out a low interest-rate home equity loan to consolidate all of their debt. Since the repayment term is typically 10 or more years on a home equity loan, and the interest rates are usually considerably lower than unsecured debt, the monthly payment on a home equity loan could be significantly less than the combined monthly payments on all of your debt prior to consolidation. This is only one alternative to bankruptcy, there are others and all should be researched to see if they would be more beneficial to you than filing for bankruptcy.
Another important thing to research prior to filing for bankruptcy is how the bankruptcy is going to affect your life. Naturally the bankruptcy will have an impact on your credit score but typically the higher your credit rating is going into a bankruptcy, the higher it is at the culmination of the bankruptcy process. Many things in life rely on your credit rating from housing (both home ownership and renting) to insurance (automobile and home/renter’s insurance use your credit rating to determine insurability and rates). Considering your future, life after bankruptcy, will help you decide if filing for bankruptcy is the best choice given your circumstances.
Once you have decided that filing for bankruptcy is the best option for you then you will need to determine whether you qualify to file for a Chapter 7 Bankruptcy (complete discharge of debts) or a Chapter 13 Bankruptcy in which you repay a portion of your debts on a fixed payment plan. The bankruptcy laws were rewritten in 2005 to ensure that only those individuals truly needing a complete discharge of their debts are able to file for Chapter 7 Bankruptcy. For those individuals who cannot completely meet all of their debt obligations but do have the financial means to meet a part of them there is the Chapter 13 Bankruptcy. There are many differences between the two and it would be wise to read up on both chapters of bankruptcy before deciding which one to file. A good starting step is to determine whether you qualify for Chapter 7 Bankruptcy. If you do then you can research the Chapter 7 Bankruptcy and the Chapter 13 Bankruptcy to determine which would be most beneficial given your specific financial situation.
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