Do I Need to File for Bankruptcy?
Are you contemplating filing for bankruptcy because you feel in over your head and are not sure what to do next? Many people who file for bankruptcy will sit down initially with an experienced attorney at the outset of their case to figure out what is in their best interests.
Bankruptcy is a nerve-wracking idea for anyone, but if you’ve been trying to get your financial feet under you for a long period of time and have been unable to do so, you may need to sit down with an attorney to walk through the best strategies and recommendations for you.
Unfortunately, there are social stigmas against bankruptcy that make some people hold off from getting this critical form of support and fresh start until the situation has gotten much worse.
Assessing your financial danger zone is the first step to determining whether or not it is appropriate for you to file for bankruptcy. Bankruptcy is not right for everyone and there are varying types of bankruptcy that may be recommended for you based on your individual situations. Several different questions can be used to figure out whether you are in over your head and need support. These include the following:
- Are bill collectors already calling you or harassing you?
- Do you feel out of control or extremely scared when you are thinking about sorting out your finances?
- Do you rely on credit cards completely to pay for basic expenses?
- Are you contemplating consolidating your debt?
- Are you unsure of how much money you truly owe?
- Do you only make minimum payments on your credit cards?
If you answered yes to at least two of those questions, then you will want to give your financial circumstances more consideration. Bankruptcy is a good option for people who owe a bigger amount than they can simply afford to pay. To identify your current financial situation, begin with an inventory of all liquid assets. You want to include stocks, retirement funds, vehicles, bonds, college savings accounts, real estate and any other accounts not in a bank.
An estimate for each item can give you a good starting point. Then take a look at your credit statements and your bills.
If the value of the assets is smaller than the amount of debt you currently owe, filing for bankruptcy may be the only way to get a financial start over.
Bankruptcy should never be considered casually, however, as the rules are complex and very strict. You can file for bankruptcy in one of two ways.
Creditors can ask for the court to name a person bankrupt but the more common route is to voluntarily file for bankruptcy.
There are two different types of bankruptcy; Chapter 7, which is known as a total liquidation, and Chapter 13, which involves a repayment plan over the course of up to five years.
Not everyone will be eligible to file for Chapter 7 bankruptcy. A Chapter 7 bankruptcy takes as many of your nonexempt assets as possible and uses them to pay off creditors. The cash from those assets is then distributed to creditors such as credit card companies and banks.
You’ll get a notice of discharge after several months. Chapter 7 bankruptcies are not applicable for everyone, however, and if you have property that you intend to keep, a Chapter 13 bankruptcy may be more appropriate.
The lawyers at McDonald Worley are currently helping those individuals who may be contemplating bankruptcy. Fill out the form on this page for a free case evaluation.