When trying to decide if you should declare bankruptcy there are 5 questions you should ask yourself. Knowing your answers to these questions will enable you to feel comfortable and confident in your choice. This is extremely important because of the fact that deciding how to resolve your financial crisis is a choice that will affect you for a decade or more.
5 Questions to Ask Yourself When Considering Declaring Bankruptcy:
1. How Long Will It Take You To Pay Off Your Debt? Compare your amount of unsecured debt (i.e. credit cards, medical bills, or any outstanding judgments) to your current income. If it would take you more than 5 years to pay off your current debt, declaring bankruptcy might be a good idea.
- How Large is Your Debt Compared to Your Income? Compare your unsecured debt (credit card, medical bills, judgments against you) again to your current income. If your debt is more than 50% of your current income, you might benefit from declaring bankruptcy.
- Are You Significantly Upside Down on Your Home? If you are more than 20% underwater on your home (i.e. it is currently worth more than 20% less than what you owe on it) you may want to consider bankruptcy.
- Can You Qualify for Chapter 7 Bankruptcy? There are 2 ways to qualify for Chapter 7 bankruptcy. Your income either needs to be below the state median for your family size or you can consult with an experienced attorney to see if you qualify under the means test.
- Can You Qualify for Chapter 13 Bankruptcy Instead? If you can’t qualify for Chapter 7, you could benefit from filing for Chapter 13. Chapter 13 bankruptcies can amount to small monthly payments on your debt depending upon your dispensable income. It’s a good option to consider for many because it can sometimes amount to pennies on the dollar.
After you’ve asked yourself these 5 questions and carefully considered your answers, consult with an attorney. You’ll feel comfortable knowing what your end goal is and what the possibilities are for your financial situation. For expert advice and legal counsel, contact the experienced bankruptcy attorneys at Westgate Law.