Two Questions to Ask Before Filing for Bankruptcy

Legal Tips & Resources

If you’re like most Americans, you may be afraid of bankruptcy. Some people fear that filing for bankruptcy would be a failure or that it will destroy their credit score forever. The truth is that bankruptcy is neither of those things. Bankruptcy is a tool that can give you a fresh start when you need it the most. While it may be a last resort, it can be your best option for debt relief. Here is what you may need to ask before filing.

Do You Have to File for Bankruptcy When in Debt?

There are no rules that state you have to file for bankruptcy. It is one hundred percent your choice. However, there are situations where it is the best decision. If you cannot pay off your debts within five years, you may want to consider filing for bankruptcy. When you have credit card debt and loans, the balance will increase over time due to interest. If you are only able to make minimum payments or you feel like you aren’t making any progress, then you may want to think about bankruptcy.

You should not feel overwhelmed by your debt. You should not have to worry about paying your bills or affording necessities because your debt is too high.

Is Bankruptcy the Best Idea for You?

Your situation will determine whether or not you should file for bankruptcy. It can be a fresh start for you. Once you file bankruptcy, you are free of most debts. Bankruptcy can discharge credit card debt, medical debt, lawsuit judgments, personal loans, and more. One of the major concerns that you should keep in mind, however, is the damage that it can do to your credit score. If you have a high credit score, you should expect to lose at least 200 points. While this might seem serious, you can easily rebuild your credit throughout the following couple of years. Keep in mind that if you do not discharge your debt, the balance could wind up hurting your credit over time also.

For a lot of people, bankruptcy can sound scary. Often, this is due to different misconceptions about it. While you do not have to use bankruptcy, it is a tool that can be incredibly helpful. If you find yourself overwhelmed with the amount of debt that you are in, then you should consider consulting with a lawyer, like a bankruptcy lawyer from the Law Offices of Arcadier, Biggie, & Wood, as soon as possible.