When is Filing for Personal Bankruptcy the Best Option?

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When is Filing for Personal Bankruptcy the Best Option?

Is Filing Personal Bankruptcy Right for You?

The average Georgian carries over $7,000 in credit card debt, in addition to student loans, car loans, and mortgages. Debt, coupled with rising costs of living, can quickly become overwhelming and late or missed payments can begin to pile up. When calls from creditors begin, you may believe that bankruptcy is your only option, but how do you know when filing personal bankruptcy is the right choice for you?

Debts Not Removed by Personal Bankruptcy

There are two primary forms of bankruptcy used by individuals, Chapter 7 and Chapter 13. It is important to note that neither of these options can completely eliminate all forms of debt. If you primarily need relief from any of the following, then bankruptcy may not be right for you, as these debts are not reduced or eliminated in most bankruptcy cases.

In these cases, working out a payment plan with the agency involved, asking for a reduced interest rate, or otherwise working to ensure that you can make the payments is necessary. A bankruptcy attorney may be able to assist you in finding help to get back on track with these debts.

Alternatives to Bankruptcy

Because bankruptcy is a difficult process with long-lasting consequences, you should ensure that you have exhausted all other options first. Many creditors will work out a repayment plan with you without the need to file for bankruptcy, particularly if you can show that the financial hardship is only temporary. You simply need to ask, and often provide documentation of your financial situation. Most creditors will gladly accept partial payments, though, if the alternative is receiving none.

Seeking credit counseling from a reputable non-profit agency is also a wise effort prior to filing bankruptcy, which will require that you have completed credit counseling within the 180 days prior to filing anyway. This counseling may be enough to help you reorganize your finances and get back on your feet without filing bankruptcy.

Boosting your income is another option, whether that means asking for a raise, taking on a side job, or simply changing jobs. While this is not an option for everyone, it is something to consider.

When it is Time to File

You should always seek the advice of an experienced bankruptcy attorney prior to making the decision to file for bankruptcy. However, some common signs that it may be time to consider bankruptcy include:

  • Making late payments less than the minimum due
  • Your income will not increase
  • Creditors have begun suing to collect
  • Wage garnishments have begun
  • Your housing is at risk
  • Debts total more than half of your income

Bear in mind that experiencing any one of these signs alone does not automatically mean that bankruptcy is your best option. However, it does mean that it is time to contact an attorney to find out what your options are.

Contact a Bankruptcy Today

The attorneys at Cornwell Law Firm are not just your allies if you choose to file for bankruptcy. Our reputable attorneys will advise you on the wisest course of action for your financial situation, even if it is not bankruptcy. Contact us today to schedule a free consultation.

Free Case Evaluation

2019-06-10T13:46:53-04:00

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