Bankruptcy: When is it a Good Idea to File Bankruptcy?
When is Bankruptcy Your Only Option?
Before choosing bankruptcy as an option, be sure to first do all you can to work things out with your creditors. You'll want to work with them to get your interest rates and monthly payments down to a minimum.
Additionally, you should do your best to reduce your living expenses and bring in extra income so that you can start chipping away at your debt and eventually become debt free.
If you haven't already taken these steps, you should do so, before you consider filing for
You really should only consider bankruptcy when you absolutely cannot pay your bills, and there is absolutely no hope of ever digging out of the financial hole you are in. If you are at that place, bankruptcy may indeed be your only option, and may be the only thing that will bring the calls from creditors to a stop.
In fact, if you're barely keeping your head above water, or if you feel like you are drowning financially, bankruptcy will provide the fresh start that you need.
Many people don't want to file bankruptcy because they don't want to ruin their credit. And it's true that a bankruptcy will stay on your record for several years. But chances are, if you are considering bankruptcy, most likely your credit is already shot.
It will indeed take many years to rebuild your credit and your life, but it can definitely be done, even after filing bankruptcy.
Don't give up hope, and surround yourself with friends and financial advisors, so that you won't get back into the same situation again that led you to declare bankruptcy in the first place.
Published by Rebecca Livermore - Featured Contributor in Travel and Lifestyle
Rebecca Livermore has been a freelance writer since 1993. Although she started off writing for print magazines, in recent years she has switched her focus to writing for the web. She writes on many subjects,... View profile
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6 Comments
Post a CommentWell written article! Another point to remember is that some people don't realize that there is no minimum amount of debt needed to file for bankruptcy. Debt is relative to a person's ability to pay it. As a bankruptcy lawyer, I've heard of plenty of people failing to consider bankruptcy when they needed it most because they thought that they didn't have enough debt.
I wrote an entire article that discusses this very point that can be found here:
http://www.articlewolf.com/finance/bankruptcy/what-is-the-minimum-debt-required-for-bankruptcy/
I like your sensible approach to this topic. I feel annoyed when I see the bankruptcy ad on TV that makes it seem like bankruptcy is the "best" solution to deal with debt, when it should only be considered as a last resort.
Sophie
"But chances are, if you are considering bankruptcy, most likely your credit is already shot." So true.
Very good advice!
Excellent common sense advice as mentioned before. I know way too many people that think it is the easy way out.
Thank you for your common-sense advice and for stating correctly that filing BK should only be an absolute last resort.