Deciding on bankruptcy is a very frustrating and unnerving experience. There is a fine line between debt and extreme debt. So if you are wondering when you should file for bankruptcy is it usually when you have no hope of paying off high debt and you have creditors that are threatening court actions to force collection of debts on you, you should consider declaring bankruptcy. Here is a few other things you should think about before going to see a chapter 7 lawyer.
Things To Consider When Filing Chapter 7 Bankruptcy
Think of how bad your credit really is. One thing about bankruptcy is that you will have bad credit for the next 7 to 10 years of your life. Now, depending on what your credit already is, it may or may not be in your best interest. Most likely, if you are considering bankruptcy, this means you have outstanding debt with credit cards, loans, mortgage payments and such which has already ruined your credit. However, there are a few cases in which, people consider bankruptcy over a few minor debts and end up ruining their credit for so long when they could corrected the debt issue another way.
Always consider your cosigner, if you had any cosigners on the loan. You have two options. One, that person might help you get rid of some of your debt, so you should approach that person about your common outstanding debt. Two, declaring yourself bankrupt will ruin that person’s credit, along with yours. If you had a cosigner that put faith in you, you at least owe it to them to talk it over with them and notify them of the situation before you take any legal action.
Start paying your bills in cash. When you file for bankruptcy, you are no longer entitled to credit cards or even bank accounts. You will need to have cash up front for many costs including lawyer fees, bills, used cars -- pretty much anything you owe or buy will need to be paid in cash up front. This is one down side to filing Chapter 7 bankruptcy.
Make sure your considering bankruptcy as an option because it is best you, and not because of certain obligations you may have contracted over the years. There are many exceptions which are not covered by Chapter 7 bankruptcy. These include, alimony, child support, taxes owed less than 3 years old, student loans, contracts,and recent purchases for large amounts of money.
If you are still unsure whether you should considering filing, it may be in your best interest to hold back and speak with a professional lawyer who deals with bankruptcy and consider other possible options to get yourself out of debt. It's best to get a numerous amount of information before heading to court and signing your name to a bankruptcy agreement.