3 Things to Consider Before Filing for Bankruptcy

How Will It Help?
One of the top things for you to fully examine and evaluate before filing is how bankruptcy would help you and the debt problems you currently face. To do this, you should gather up statements from every debt you have and create a list. Write down the type of debt you owe and the amount and bring this list to a bankruptcy law office.

When you visit a bankruptcy lawyer, he will want to see your list of debts, and you must make sure you include every debt you have. In addition to bringing a list of your debts, bring your most recent tax return as well as your current paystubs. Your income will affect which branch of bankruptcy you qualify for, and your lawyer will want to see your income for this reason.

During your visit with a lawyer, you will learn which branch of bankruptcy you qualify for and which branch would offer the best effects for your financial problems. You will also learn how filing for bankruptcy would benefit you and affect your debts.

If you discover that bankruptcy would offer a lot of relief, then you might want to go ahead and file; however, you might discover from meeting with a lawyer that bankruptcy would not provide you with a lot of help for your finances. The answer to this really depends on your income, the branch of bankruptcy you use, and the types of debts you have.

What Consequences Will It Have?
Filing for bankruptcy has one main consequence, which is the negative effects it has on a person's credit. A person who files for Chapter 7 bankruptcy will have this filing on their credit report for 10 years from the date the court discharges the case. A person filing for Chapter 13 will have this filing on their report for seven years from the time the repayment plan ends.

A bankruptcy filing on your credit report is listed as a public record, and this is a derogatory mark. This filing could impede your ability to get loans, credit cards, and credit lines; however, the effects of filing for bankruptcy are not permanent. The filing will drop off after the 7 or 10-year time frame.

Are There Alternative Options?
The other factor you should consider before filing is alternative options to bankruptcy, and there are several different options you could evaluate. For example, if you owe a lot of money on credit cards and can repay some of the debt, you could look into a debt-settlement plan. This plan requires repaying only a portion of the debts you owe instead of the full amounts.

One other alternative option is credit counseling, which involves working with an agency to consolidate your debts. The goal of this plan is to make it easier to repay your debts by having only one payment to make each month.

Getting into debt is never hard to do, but getting out of it is often a very difficult task. If you are at your wit's end and need some advice about your financial situation, contact Armstrong, Betker and Schaeffer, PLC. We can help you determine if bankruptcy is right for you and any alternative options that you could use.