How to Decide If You Should File Bankruptcy

If you have been struggling with debt, whether it be credit cards, loans or other debt, it can be frustrating. It is hard to stay afloat, living paycheck to paycheck. And if you are late in making your monthly payment, the creditors start calling.

You might have already tried other options, such as negotiating your debt with your creditors, perhaps asked for a lower interest rate or attempted to settle you debt with an one-time payment for less than the amount due.

If you have tried these attempts at reducing your debt and are still having difficulty, if might be time to consider filing for bankruptcy. Sit down and determine the total amount of debt that you have. Determine how long it will take you to pay it down with a reasonable, affordable monthly payment. If you owe a total of $20,000 and you can only afford to put $200 a month towards this debt, it will take you at least eight years to pay this debt off, not including interest incurred.

One thing to consider is what you plan on accomplishing in the upcoming months and years. For example, if you plan to purchase a house in the next year, I would continue paying your debt down, even if it takes you 10 years to do it.

If you already own your own house or do not plan to purchase a house in the next few immediate years, I would look into filing for bankruptcy. Bankruptcy eliminates all unsecured debt. If you own your home, more than likely, you will not lose it. If you have a car note, as long as you agree to continue paying that note, your car will not be repossessed.

Once you decide that it would be in your best interest to file for bankruptcy, you need to find a good, capable attorney who can handle this for you. You should try to find an attorney who handles mostly bankruptcies. Bankruptcy is handled in Federal Court and the rules in Federal Court are different than State Court. Having an attorney who deals mostly with bankruptcy ensures that they know all the ins and outs with filing, meeting with creditors (usually referred to as a meeting of the creditors or a 341 meeting), and, at the end, your discharge.