Dealing with Debt

When Should You Consider Bankruptcy?

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How do you know when it is time to file for bankruptcy? There are several reasons why a person would consider declaring bankruptcy. Here are some of the reasons why you need to consider filing for bankruptcy:

  • Do you pay only the minimum payment on your monthly bills?
  • Are you several months behind on your payments?
  • Do you have bill collectors calling you?
  • Do you rely on credit cards to pay for groceries?
  • Are you living paycheck to paycheck?

If you want to avoid declaring bankruptcy, it is important to sit down and discuss your financial situation with a certified credit counselor. A lot of people do not understand how seriously in debt they truly are until they sit down and review their debt burden. Credit counseling is one way to review your situation to find out if you should consider filing for bankruptcy to help you restart your financial life. Click Here for more information about Credit Counseling.

Review Your Finances

What is your debt to income ratio? You need to review your finances to determine if you have enough money to pay for the amount of debt you owe. When your debt is more than your income, bankruptcy may be an option, if you are unable to obtain another source of income. Declaring bankruptcy may be your best option in order to get out of debt and move forward with your financial future.

Declaring Bankruptcy

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To determine which type of bankruptcy you need to declare, it helps to undergo credit counseling and to meet with an attorney. Consult with your attorney to find out if you should pursue bankruptcy, or if you will benefit from some other type of debt repayment plan such as a Debt Management Program.

Chapter 7 Bankruptcy

This is a common way to restart your financial life. If you are dealing with a loss of income, expensive bills, medical expenses, or divorce, it is easy to see major financial burdens. Chapter 7 bankruptcy will liquidate your assets to pay off as much debt as possible. The cash from the assets will be distributed to your creditors. The bankruptcy filing will remain on your credit record for 10 years. Chapter 7 bankruptcy offers a quick start to repair your finances. The downside is almost all of your assets will be taken away to pay for your debt. This means you could lose your home, car, furniture, and other assets that you want to keep.

Chapter 13 Bankruptcy

If you have property that you want to keep, Chapter 13 is normally the best bankruptcy option. You can pay off your debts over a time period of three to five years. This is beneficial for people with a predictable, stable income. It will provide a grace period, allowing all debts to be discharged after the end of the grace period. Creditors are not allowed to contact you, and you will work to continue paying off your debt over the next few years.

Steps to Take when Considering to File for Bankruptcy

After meeting with your lawyer and discussing all of your options, if you determine that bankruptcy is right for you, then your lawyer will need you to obtain a Pre-Filing Bankruptcy Certificate from a certified credit counseling agency. You can contact Advantage Credit Counseling Service to obtain said Pre-Filing certificate. Sometimes you have to recognize that you will not be able to pay off your debts alone. With a good lawyer, and proper information, you can find out what’s the best option to help you get back on track.

Feel comfortable and informed about your options when filing for bankruptcy with help from Advantage CCS. With Advantage on your side, filing for bankruptcy comes as a stress-free option that will help you understand all your available options before declaring bankruptcy. Our free Credit Counseling Session can help you determine if filing for bankruptcy may be an option for you. Take action today by enrolling in our free online credit counseling session and put the advantage in your court!

Author: Lauralynn Mangis
Lauralynn is the Online Marketing Specialist for AdvantageCCS. She is married and has two young daughters. She enjoys writing, reading, hiking, cooking, video games, sewing, and gardening. Lauralynn has a degree in Multimedia Technologies from Pittsburgh Technical College.