“Should you file for bankruptcy?” Since we are not attorneys, we cannot give any type of legal advice. Also, as of January, 2017, our office no longer prepares bankruptcy documents. One thing I know, however, is that the reasons to file bankruptcy and the final decision to do so is personal to that individual.
Should I File Bankruptcy?
There are many reasons to file for bankruptcy; however when someone asks the question “Should I file bankruptcy,” I remind people three things: 1) No one else is in their shoes; 2) No one else lives their life and 3) No one else lives under their stress. Although there are certainly some legal concerns that may come into play when people are considering filing bankruptcy, it really comes down to it being a “personal decision”.
Reasons to File Bankruptcy
When an individual files for bankruptcy, there is no set amount of indebtedness one needs to have incurred. I have had people file for bankruptcy for as little as $5,000. This may seem a small amount of money to some people, but to this particular client the pressures of being $5,000 in debt was just as debilitating as had it been $50,000. They just could not handle the pressures and collection effects of their creditors at that time, and it was destroying their life.
It is important that a person evaluate their entire financial situation when assessing their reasons to file bankruptcy. Once an individual files a Chapter 7 bankruptcy, they will not be able to file again for 8 full years. Since no one can see in the future what financial travesties might occur to them, it is important that all possibilities are carefully thought through when reviewing the reasons to file bankruptcy and making this decision.
Some questions you might ask if considering bankruptcy are:
- Do you pay more than the minimum requirement on your bills?
- Is your debt increasing due to accruing interest, even with minimum payments?
- Do you foresee yourself paying off your debt within the next five years?
- Are you employed and making a stable income?
- Has a recent life situation, such as a divorce or an injury, seriously affected your finances?
- Is your financial situation affecting your health and family life?
- Do you expect having to file bankruptcy in the future?
- Are you concerned about the ramifications to your credit?
- Will the debts you have “go away” if you file bankruptcy?
- Will all your property be “protected” if you file bankruptcy?
- Will filing bankruptcy affect your reputation in any way?
- Do you have any other realistic options to resolve the debt?
- Are you eligible to file?
If you are considering filing bankruptcy, take the time to think it through. Your reasons to file bankruptcy and its “pros and cons” may be completely different from that of your neighbor or friend who may also be considering filing. Look at all the options and seek out the opinions of family members and friends who will offer a listening ear and another perspective, rather than harsh judgment. There is life after bankruptcy, and people who have filed bankruptcy have been able to re-establish their credit over time and, yes, even buy a house. The stigma of filing bankruptcy is not so important; but rather what lessons were learned through the process, and how one handles their finances in the future.