When to File Bankruptcy

If you have found yourself overwhelmed every time you think about your debt level, it is likely that you have considered filing for bankruptcy. If you are like many other people, you have probably wondered if filing is really worth it: what will it do to your credit score? Isn't there a way to simply pull yourself up and out of debt on your own? Isn't bankruptcy just cheating? These are questions that many people ask themselves, and in some cases, these questions can actually do more harm than good. The truth is that if you are considering filing for bankruptcy now, it is very likely that you have actually needed to file for a while now. If you still need confirmation, here are some things to look for.

Resources and Debt Management

It is a common misconception that if you just work hard enough, you will be able to manage your debt and if you can't, it's because you are spending too much money. This is, of course, untrue, and an example of very destructive thinking. If you look at your finances and debt level honestly and objectively, is it likely that you will be able to pull through without bankruptcy? Are you struggling to pay your debts because you are living above your means or because you just don't have enough money to put toward your creditors and your day-to-day expenses? When you review your monthly budget, how much can you realistically spare to pay your creditors and how much are you currently paying? I can be hard to be honest with yourself, but if your struggles are not fixable, it is time to file for bankruptcy.

Assets and Income

When you make a monthly budget, make a list of your assets as well. Anything that has monetary value is considered an asset, from vehicles to credit cards to PayPal accounts. Some assets are also liabilities, such as frivolous or unnecessary purchases. If you liquidate your assets, will it help you at all? Is the amount you owe greater than the amount it is worth? Your sources of income are equally important. How do you make your money? Do you manage your income well or do you have problems? Do you make less than you need to take care of your debts? These questions are good ones if you are considering a Chapter 7, especially, as a 7 does include asset liquidation. These lists will also help you at your initial consultation if you decide to file.

Needs and Necessities

Life happens. You may find yourself with unexpected medical bills if your child falls and gets injured. Your car may break down or get totaled. These events can make money and debt management more difficult, especially since they can be so expensive. In addition, things like food, rent, and utilities can be expensive! It is important to be realistic when accounting for these things. Don't assume that you will simply cut back on things if you know logically that you cannot. If you find yourself struggling month to month even without the added pressure of unmanageable debt, it is probably time to file for bankruptcy. It is a safe way to reduce debt and stress, and it is your legal right to file if it is the best way to take care of yourself and your family.

"I was worried I would lose everything. Brian helped me sort things out and restored my life. I don't know where I'd be without him!"

-Sue H. Ogden, UT