Want to File Bankruptcy? First Answer these Questions

If you find yourself considering the pros and cons of bankruptcy, there is a good chance you are on the fence as to whether or not you should move forward. While some people decide to file right away, others hold off as they are unsure of if doing so would be in their best interest.

Here are five questions to answer before you make a final decision:

1. Which type of bankruptcy would be best for you? As an individual, your two primary options include Chapter 7 and Chapter 13. There are benefits and drawbacks of both. Along with this, there are eligibility requirements associated with each type.

Note: most people find that they do not qualify for Chapter 7, meaning that they have to consider Chapter 13 if they are going to file for bankruptcy.

2. What are the benefits of this financial decision? There is no point in filing bankruptcy unless you are going to benefit in some way, shape, or form. For example, with Chapter 7 you are in position to wipe clean some or all of your debt.

There are definite drawbacks of bankruptcy, however, you have to weigh these against the benefits so you can make an informed and confident decision.

3. Who is going to help you along the way? You are within your rights to file bankruptcy on your own. That being said, this is a complex process that is sure to be full of many challenges.

To protect against mistakes and ensure that the right decisions are made along the way, it is best to hire an experienced and knowledgeable bankruptcy attorney. This person will guide you through the entire process, answering all your questions along the way.

4. Are there other options to consider? Even though you may end up filing bankruptcy, don’t make this decision until you consider other options. You could experiment with credit counseling and/or personally negotiate with creditors.

Tip: if you can avoid bankruptcy you will want to strongly consider doing so.

5. Are you okay with the long term impact of bankruptcy? The short term benefits may get you excited, but the long term impact is something you cannot afford to overlook. Did you know your bankruptcy will remain on your credit report for an extended period of time? This will make it difficult to buy a home or secure any type of loan in the immediate future.

As you begin to consider bankruptcy, answer the five questions above. Doing so will help you make the right decision for your personal and financial situations.