No One Wants To File Bankruptcy

You can't get away from it, just turn on the TV and all you hear is bad news about the economy. Unemployment is still close to 10% nationwide and foreclosure and bankruptcy rates just continue to rise breaking past records. It seems that no one wants to talk about this problem. It's true, no one wants to file bankruptcy. It's about as much fun as having a colonoscopy done. But when you have to, filing bankruptcy can relieve a huge financial burden off of your back. When it comes to filing bankruptcy, many people bury their head in the sand thinking that things will get better. Being proactive when you see the warning signs can many times stop you from throwing good money at bad.

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If you have been considering filing bankruptcy the financial problems might even be worse than you think. Having unresolved debt problems that have lasted a long period of time could be a good indicator that you should consider bankruptcy. Just being able to make the minimum payment without reducing your debt, should be a sign that you're not getting anywhere. One way to know that you are in serious financial trouble and should consider bankruptcy is that you should be able to pay off all of your debt over a period of 5 to 7 years on your own. If not, you are a good candidate to file bankruptcy. And this is not including anything major coming into your life during this period of time. If something happens like a job loss or an illness your life can quickly spiral out of control.

One of the most important indicators of deciding whether or not to file bankruptcy is how much savings you have. If most of your money is going to pay interest on credit card debt and you have none left over for saving for a rainy day, this should be a warning sign. This is not including a 401(k), we are only talking about savings for an emergency, like car repairs. Some people rely on their credit cards for emergencies. What happens to these individuals is sometimes their credit limit gets tapped out and they have no way of taking care of their emergency.

Being proactive and understanding what could happen before it does can save a lot of pain. Filing for bankruptcy was created for this reason, to give good people a second chance by wiping out their debt. Chapter 7 bankruptcy is best used for large amounts of unsecured debts. When an individual files Chapter 7 they will be protected by the automatic stay, stopping all collection attempts by their creditors. Having this breathing room can many times allow the debtor to clear their heads and come up with a game plan. In the end, the debtor will discharge all their unsecured debt and hopefully become debt free. Chapter 13 bankruptcy is king when an individual makes a decent income and is just trying to re-organize their finances while protecting their property. Chapter 13 requires the debtor to negotiate a 3 to 5 year payment plan to pay back creditors. The creditors are paid back by priority with the secured creditors first and the unsecured creditors getting whatever's left over. If you're living paycheck to paycheck and not gaining any ground on your debts, file bankruptcy and work toward becoming debtfree. Contact a bankruptcy attorney for a consultation and see if it works for your situation.

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