Bankruptcy is not necessarily a defeat. In fact, contrary to popular conception, it is a specially designed tool to allow people to restructure their debt and pay it back in much more manageable installments. Not all bankruptcy plans forgive loans, and not a single one forgives everything, so a person filing for bankruptcy is looking more for a second chance than a clean slate.
But, it can be hard to know when exactly to file, if at all. After all, a Chapter 7 bankruptcy stays on your credit report for 10 years after it is arranged, which can affect your ability to take out new lines of credit.
Questions to Ask
First, ask yourself some questions to assess your financial situation:
- Are you only able to make minimum payments on your credit cards?
- Do you get calls from bill collectors
- Do you use your credit cards to pay for necessities like food?
- Are you unsure how much you really owe to various lenders?
If you were able to answer “Yes” to these questions, then it’s time to start assessing your situation.
Assessing Your Debt
It’s time to lay out all of your bills, list all of your liquidatable assets, and come face to face with your financial situation. It may be painful, but if bankruptcy has crossed your mind more than once, it is time to figure out whether or not you can afford to keep on postponing payments.
How to File Bankruptcy
Bankruptcy can be filed in two ways. You can voluntarily declare, or your creditors can ask the court to order you bankrupt. Obviously, the first choice is preferable, so if you think things are getting bad enough, don’t be ashamed to throw in the towel, do yourself a favor, and get yourself some help.
In 2013, there were an estimated 1,071,932 filings (728,883 of them were Chapter 7), so by no means should you feel alone in this endeavor. It can be hard to admit your need to yourself, but once you do, you are only doing yourself and the people around you a favor. Consult a bankruptcy attorney to find out which plan you qualify for and how best to utilize bankruptcy resources. Your bankruptcy lawyer will be able to instruct you on exactly how to file bankruptcy.