Knowing WHEN to file bankruptcy is critical to your financial future. When your liabilities outweigh your assets it is important to make the decision: Should I declare personal bankruptcy?
This decision is influenced by the debt you’ve built up and your ability to make payments or pay the full amounts. When you have accumulated more debt than you can realistically repay, declaring bankruptcy may be your last resort.
There are two basic types of personal bankruptcy.
Chapter 7 bankruptcy can wipe out or reduce most of your unsecured debt (debt for which there is no property the creditors can take). However, when filing for Chapter 7 you might lose some of your personal property
If your income is determined sufficient enough to make payments on your debts you may be required to file for Chapter 13 bankruptcy. Chapter 13 bankruptcy allows you to develop a repayment plan to catch up on your debt.
Bankruptcy proceedings will most likely allow you to keep enough property to make a new start after declaring.
While bankruptcy can be useful and effective in resolving certain financial problems, it is important to first consider all your options. Go over all your financial documents and consider your situation carefully before you make the decision to file.
There are requirements you must meet in order to file for certain types of bankruptcies, so be sure you are eligible for the type of bankruptcy you want to file.
Determine which of your debts will be cleared and which ones you will still have to pay. If the bulk of your debts are not dischargeable, such as debts dealing with child support or certain court judgments, there is no reason to file for bankruptcy.
Be sure to know what will happen to your home, car, and other personal property if you file for bankruptcy.
Before filing bankruptcy, study the exemption laws carefully and make sure you will be able to keep enough to survive. If you are going to lose important personal property after filing, bankruptcy may not be the best plan.
Bankruptcy has become a useful tool for getting rid of credit card debt. Find out if your credit card debt qualifies before you file.
Lastly, ensure your pension plans are safe and you are not leaving any cosigners with your debt.
Bankruptcy is not the answer to all financial problems. However, if you have decided to file it is important to determine when to file for bankruptcy. In general you should wait as long as possible to declare bankruptcy since you can only do so every six years.
Deciding to file for bankruptcy, or deciding when to file, are decisions best made with the help of an attorney who is familiar with the bankruptcy process.
An attorney will look at your assets and property and the nature and character of your debt and determine what the possible consequences might be after you file for bankruptcy. Save this valuable option until you desperately need it.
The following articles may help you with your decision making. We hope they will prove useful to you:
Should I file for bankruptcy?
Chapter 7 bankruptcy tips
Finding the best bankruptcy attorney guide
Ultimately, after weighing all the options and information, it is up to you to make the determination on when to file bankruptcy.