Do I Have to File for Bankruptcy if I am in Debt?

Are you stressed about your debt? If you feel that you must file bankruptcy, your are not alone. However, there are times when bankruptcy is not the answer or there are alternatives. In most instances, people will do almost anything to avoid bankruptcy. Nonetheless, the typical reason for seeking out a bankruptcy attorney is the onslaught of threatening letters and phone calls from debt collectors. They just place so much pressure on a person that they believe bankruptcy is the only option.

Nonetheless, filing bankruptcy is no small thing, and typically should not be your first choice dealing with your debt. In fact, the debt relief provided is an answer for only serious debt situations. In basic terms, bankruptcy is only for those situations when you owe more than you can repay. While the explanation is a bit confusing, a bankruptcy can become complicated. It is only feasible for a select group, and you should only attempt this route after learning more. Don’t you agree?

Some Reasons for Not Filing Bankruptcy

1. You Can Pay – Bankruptcy is not an option is you have the means to pay your debts. It is not a choice if you simply want to walk away from paying or have poor money management skills. At the end of it all, you are likely better off paying your debt if you earn enough.

2. The Debt Is Mostly Taxes –  If most of your debt derives from taxes and is comparatively recent, a bankruptcy will probably not be a reliable choice. This is most taxes are not dischargeable. Regardless, some taxes are. So, it is a good idea to meet with a bankruptcy attorney.

3. The Debt Is Mostly Student Loans – Since 2005, student loans are another category of debt that is considered mostly non-dischargeable. That said, it is possible under a hardship, but it is very difficult. If student loans are the primary issue, it is probably better to seek other options.

4. It Will Hurt Your Credit – Most people understand that a bankruptcy will impact their credit. Additionally, repeated late payments will continue showing up if you continually find it hard to pay on time. While bankruptcy gives you the ability to cut your losses, it could have a devastating effect if your credit score is about 700.

5. Loss of Assets – While some assets are protected, filing bankruptcy does have the risk of your assets being seized and sold to pay your debt. If you have any property that you just can’t give up, such as a family heirloom, bankruptcy may not be a good choice.

What haven’t we covered yet that is important to you? If you would like to talk about if you should file bankruptcy, or other related topics, please contact us.

Please contact our law office concerning your case. The content of this article does not constitute an attorney-client relationship.