Choosing The Right Course of Action

About four years ago, I could tell that things were turning south with my business. Cash flow was tight, and customers simply weren't coming back to shop some more. I realized that if I was going to keep my house, I would need to do something to resolve my finances. Although it was scary, I decided to meet with a bankruptcy attorney. After I explained my situation, he helped me to understand the process and how to tell if it was a good idea or not. When I decided to do it, things started changing for me right away. This blog breaks down bankruptcy in layman's terms, so that you can decide whether or not it is right for you.

Is Now the Time? How to Recognize That Bankruptcy Is Inevitable


Financial problems are nothing new for many consumers. It has become far more acceptable for people to live beyond their means, and the credit card offers seem to never stop. Feeling overwhelmed by financial chaos might cause many to consider a bankruptcy filing, but most people understand the serious consequences of that action. A bankruptcy filing should be undertaken only after a realistic assessment of your financial situation. Read on to learn more.

Ask Yourself These Questions

To begin an assessment, answer the following questions:

  1. Are you being harassed by debt collection agencies?
  2. Are you only able to pay the minimum on your credit card balances each month?
  3. Are you using your credit cards to pay for groceries, gas, utilities, and other necessities?
  4. Do you have no idea of your total debt load?
  5. Are you using cash advances to pay other debts?

Do the Math

If you answered "yes" to any of the above, further action is needed. You must take a hard look at what you owe and your income before you make the bankruptcy decision, and that can only happen after you do the math. Add up your debts first, then add up your assets. Your assets include your salary, real estate, savings accounts, investment and retirement accounts, and more. Assign a dollar amount to all assets. If your debt load is far higher than the total amount of your assets, you may be financially insolvent and headed for bankruptcy.

Two Types of Bankruptcy 

There are two main ways for consumers to declare bankruptcy, and they each have their own positives and negatives. These two forms of bankruptcy are named after bankruptcy code. Most consumers find the greatest and quickest debt relief by filing a chapter 7 bankruptcy. This form of bankruptcy is also known as a "straight" bankruptcy or a "liquidation" bankruptcy. You can be free of almost all debt in a matter of months with a chapter 7 bankruptcy. Unfortunately, if you have a lot of non-exempt property, it may be seized and used to pay your creditors.

A chapter 13 filing holds a major benefit—there is no need for the filer to pass the means test. Chapter 7 requires that filers have income that comes in under the state median, so a chapter 13 is ideal for those with higher incomes. A chapter 13 filing does not allow for the loss of property and thus might be best for those with plenty of property at risk. Chapter 13 bankruptcies do take a lot longer to be finished—several years in most cases.

The only way to deal with a bad financial situation is to know your numbers and take action. Speak to a bankruptcy law attorney about your situation today.


28 December 2018