Current economic conditions are causing a lot of people who have never before thought about filing bankruptcy to now look at it as a workable answer to their financial troubles. The problem is that not everyone can be helped by filing bankruptcy. So, if you're one of those individuals who has never, until recently, given thought to filing bankruptcy, you need to know whether bankruptcy will help you or not.
Should You Even Be Considering Filing Bankruptcy?
As funny as it sounds, there's no comprehensive test you can take to discover whether bankruptcy is right for you. You don't need a specific level of debt. You don't need to make less than a specific amount of money. And, you don't even need to be in arrears in payments to your creditors.
Bankruptcy isn't a decision you make by marking off boxes on a flow chart. Bankruptcy is an individual decision. But, it's a individual decision that's founded on specific factors in your life. They are some of the things you need to look at before deciding one way or the other about bankruptcy.
1. Are you in financial trouble? You may be in financial distress if you're having difficulty paying the minimum payments on your credit cards. And, if you're scarcely able to keep necessaries like food, clothing and shelter you're likely in financial trouble.
2. Do you live paycheck to paycheck? If you had even a moderate health problem, would it place you in a financial crisis?
3. Are you judgment proof? Put differently, do you have no assets that can be confiscated and sold to pay off your liabilities? You may not need to file bankruptcy if you're judgment proof. Then again, judgments do stick around for a while. Each state's judgment laws vary on exactly how long a judgment can hang around. But, what you need to consider is that your current bad situation may, and probably will, improve in the future. If it does, those judgments that were of no concern during your financial crisis will interest you because you could be looking at the confiscation of your future assets. Most lawyers will give you a free bankruptcy consultation. You should use it to discuss this particular issue.
4. Are creditors and collection agencies harassing you? Bankruptcy is one alternative to end that harassment. But, you may also terminate it with a letter writing campaign under the federal Fair Debt Collection Practices Act and associated state law fair debt collection laws. But, bankruptcy is likely the best alternative if you're being harassed and you're in financial distress (see #1).
5. Are you looking at foreclosure? You'll be able to block a foreclosure by filing a Chapter 13 bankruptcy. Chapter 13 allows you to restructure your debts and pay your mortgage arrears over time.
Can Bankruptcy Assist You?
Bankruptcy won't give you more income. So, if you don't make enough money to support your lifestyle, bankruptcy isn't your solution. You either need to lower your expenses or increase your income. You may even need to do both. But, you don't need to file personal bankruptcy.
Bankruptcy also won't help if your primary debts are non-dischargeable debts. Bankruptcy law defines those debts that are dischargeable and those that are not. The following is a short list of such non-dischargeable debts in a Chapter 7 Bankruptcy under current bankruptcy laws.
* Recent taxes and penalties imposed by the government
* Child support
* Criminal files or restitution ordered by a court
* Personal injury awards where the debtor was intoxicated at the time of the incident
* Debts that aren't listed in the bankruptcy filing schedule
* Student loans (there are exceptions but it's nearly impossible to meet the prerequisites for them. So, it's advisable to consider student loans as non-dischargeable)
* Debts that were part of a prior bankruptcy case and that weren't discharged
Closing Considerations for Personal Bankruptcy
Determining whether to file bankruptcy isn't an simple decision. But, it's a decision you'll be able to make if you take a sound and well-balanced approach to it. As part of your consideration, you'll need to consider your emotions, your background, your spiritual beliefs and your values. So, consider the following:
1. Do your own research. Discover everything you can about bankruptcy.
2. Keep your future in mind. Think of how you'll feel when the case is all over and you're out from under a stack of debt. How will you feel about yourself in 6 months or a year? Will you be delighted with your choice to either file bankruptcy or not file bankruptcy?
3. Find the right bankruptcy attorney for you. Nearly all bankruptcy attorneys will give you a free consultation. Use that free consultation to interview the lawyer. But, when you begin interviewing bankruptcy attorneys, don't base your ultimate hiring decision totally on price. It will be tempting to engage the most inexpensive. After all, you're in a financial crisis so the more inexpensive the better, right? That's not always the case. Interview the lawyer first. Be sure you're a good match with that attorney. Your bankruptcy lawyer will be working for you so you need to be comfortable with the comprehensive approach to your case. You need to feel good about the interactions you have with the lawyer and staff. You want a bankruptcy lawyer who will assist you through this crisis in a positive way. You don't want to feel judgment or disfavor from either the lawyer or the staff.
4. Filing bankruptcy is a moral decision. Don't kid yourself into thinking it's not. But, you do have to make the decision that's best for you and your household. So ask yourself: "Is it more respectable to fight a losing financial struggle that places your family's future at risk in an attempt to pay back old debt?" Or, is it more honorable to admit you did your best, you couldn't make it work and you need a clean start that will permit you to devote your personal time and effort into activities that will more positively affect your family's future?"
Only you can answer that question. Take your time. Make the proper decision for you and your household. Once you've come to that decision, have faith in your ability to make the appropriate choice. Then, go forward knowing that your financial crisis will shortly give way.
Should You Even Be Considering Filing Bankruptcy?
As funny as it sounds, there's no comprehensive test you can take to discover whether bankruptcy is right for you. You don't need a specific level of debt. You don't need to make less than a specific amount of money. And, you don't even need to be in arrears in payments to your creditors.
Bankruptcy isn't a decision you make by marking off boxes on a flow chart. Bankruptcy is an individual decision. But, it's a individual decision that's founded on specific factors in your life. They are some of the things you need to look at before deciding one way or the other about bankruptcy.
1. Are you in financial trouble? You may be in financial distress if you're having difficulty paying the minimum payments on your credit cards. And, if you're scarcely able to keep necessaries like food, clothing and shelter you're likely in financial trouble.
2. Do you live paycheck to paycheck? If you had even a moderate health problem, would it place you in a financial crisis?
3. Are you judgment proof? Put differently, do you have no assets that can be confiscated and sold to pay off your liabilities? You may not need to file bankruptcy if you're judgment proof. Then again, judgments do stick around for a while. Each state's judgment laws vary on exactly how long a judgment can hang around. But, what you need to consider is that your current bad situation may, and probably will, improve in the future. If it does, those judgments that were of no concern during your financial crisis will interest you because you could be looking at the confiscation of your future assets. Most lawyers will give you a free bankruptcy consultation. You should use it to discuss this particular issue.
4. Are creditors and collection agencies harassing you? Bankruptcy is one alternative to end that harassment. But, you may also terminate it with a letter writing campaign under the federal Fair Debt Collection Practices Act and associated state law fair debt collection laws. But, bankruptcy is likely the best alternative if you're being harassed and you're in financial distress (see #1).
5. Are you looking at foreclosure? You'll be able to block a foreclosure by filing a Chapter 13 bankruptcy. Chapter 13 allows you to restructure your debts and pay your mortgage arrears over time.
Can Bankruptcy Assist You?
Bankruptcy won't give you more income. So, if you don't make enough money to support your lifestyle, bankruptcy isn't your solution. You either need to lower your expenses or increase your income. You may even need to do both. But, you don't need to file personal bankruptcy.
Bankruptcy also won't help if your primary debts are non-dischargeable debts. Bankruptcy law defines those debts that are dischargeable and those that are not. The following is a short list of such non-dischargeable debts in a Chapter 7 Bankruptcy under current bankruptcy laws.
* Recent taxes and penalties imposed by the government
* Child support
* Criminal files or restitution ordered by a court
* Personal injury awards where the debtor was intoxicated at the time of the incident
* Debts that aren't listed in the bankruptcy filing schedule
* Student loans (there are exceptions but it's nearly impossible to meet the prerequisites for them. So, it's advisable to consider student loans as non-dischargeable)
* Debts that were part of a prior bankruptcy case and that weren't discharged
Closing Considerations for Personal Bankruptcy
Determining whether to file bankruptcy isn't an simple decision. But, it's a decision you'll be able to make if you take a sound and well-balanced approach to it. As part of your consideration, you'll need to consider your emotions, your background, your spiritual beliefs and your values. So, consider the following:
1. Do your own research. Discover everything you can about bankruptcy.
2. Keep your future in mind. Think of how you'll feel when the case is all over and you're out from under a stack of debt. How will you feel about yourself in 6 months or a year? Will you be delighted with your choice to either file bankruptcy or not file bankruptcy?
3. Find the right bankruptcy attorney for you. Nearly all bankruptcy attorneys will give you a free consultation. Use that free consultation to interview the lawyer. But, when you begin interviewing bankruptcy attorneys, don't base your ultimate hiring decision totally on price. It will be tempting to engage the most inexpensive. After all, you're in a financial crisis so the more inexpensive the better, right? That's not always the case. Interview the lawyer first. Be sure you're a good match with that attorney. Your bankruptcy lawyer will be working for you so you need to be comfortable with the comprehensive approach to your case. You need to feel good about the interactions you have with the lawyer and staff. You want a bankruptcy lawyer who will assist you through this crisis in a positive way. You don't want to feel judgment or disfavor from either the lawyer or the staff.
4. Filing bankruptcy is a moral decision. Don't kid yourself into thinking it's not. But, you do have to make the decision that's best for you and your household. So ask yourself: "Is it more respectable to fight a losing financial struggle that places your family's future at risk in an attempt to pay back old debt?" Or, is it more honorable to admit you did your best, you couldn't make it work and you need a clean start that will permit you to devote your personal time and effort into activities that will more positively affect your family's future?"
Only you can answer that question. Take your time. Make the proper decision for you and your household. Once you've come to that decision, have faith in your ability to make the appropriate choice. Then, go forward knowing that your financial crisis will shortly give way.
About the Author:
Harvey L. Cox is an attorney, mediator and author. Visit his legal education sites to learn more about your legal rights. Learn about your rights as a judgment creditor at Texas Judgment Collection Center. Learn more about Bankruptcy Law at The Bankruptcy Law Info Center. And, learn more about general legal issues at NoLegalese.com.
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