It's safe to say that a lot of people wonder if they might benefit from filing bankruptcy. Financial experts advise people to keep a tight grip on their debt loads and to always be aware of how much money you owe at any given point. What those experts can't tell you, though, is when to declare bankruptcy. To find out more about this issue, read on.
It's All Relative
As with everything, debt is a very personal issue. A debt load that might terrify one person passes unnoticed with another. That means that there is no magical number that says "it's time." What you can do, though, is take look at the following factors to help you see things a bit more clearly:
What is your fiscal worth?
That just means adding up your total debts and your total assets and determining the difference. If your assets are a lot higher than your debt load, you may be able to get out of your tight money situation without filing for Chapter 7 bankruptcy. On the other hand, if your debts are far higher than your assets, you may never be able to pay that debt off. It might time to speak to a bankruptcy lawyer about your situation.
What is your monthly budget like?
If you are having to use credit cards to pay your bills, buy groceries, and other necessities, and you are frequently taking cash advances, you are probably in trouble with your debt load. Eventually, you will mainly be trying to pay the huge monthly minimum on your credit cards and you'll have no more available credit to use. As your bills are paid late, your credit score drops, making it impossible to get more new credit. You can get in trouble in a hurry doing things this way, but a bankruptcy filing will have an immediate positive effect on your monthly budget. If there is any one form of debt that Chapter 7 bankruptcy is good at eliminating, it's credit card debt. Once you file, all that money you're using to pay the minimums can go toward other important uses like food and shelter.
What type of debts do you have?
Credit card debt is common, and those debts are easily discharged with bankruptcy. Some debts, though, cannot be discharged. If you have a lot of the following types of debt, speak with your bankruptcy lawyer about what might happen to it when you declare bankruptcy:
- Tax debts
- Back child support and/or spousal support
- Court fees
- Personal injury judgments
- Victim restitution
- Student loans
Speak with a bankruptcy law attorney about your personal debt situation and about filing for bankruptcy.