You may never want to find yourself thinking about bankruptcy, but if you do, you shouldn't jump ahead until you consider the finer details of the process. It's the information you collect that will help you decide what to do next.
Here are five points of emphasis that can help you decide if now is the time to file for bankruptcy:
- Your eligibility: You may be ineligible for Chapter 7 bankruptcy, but that doesn't mean you shouldn't learn more about Chapter 13.
- Your future: If you think you can improve your finances without filing for bankruptcy, you may want to give it a shot. However, if this seems far-fetched, consider taking action now.
- Your debt load: In addition to how much debt you're carrying, learn more about the type. Not all liabilities can be discharged. For example, bankruptcy doesn't usually discharge student loan debt and child support payments.
- The potential drawbacks: Although there are many benefits of bankruptcy, don't ignore the potential drawbacks, such as the impact on your credit score. Understanding the pros and cons will help you plan in advance for anything that could come your way.
- The process: Filing for bankruptcy is not something you do today and forget about tomorrow. Chapter 7 bankruptcy will last somewhere between four and six months, while a Chapter 13 repayment plan remains in effect for three to five years.
Only you know if filing for bankruptcy is the best way to improve your finances. If you're on board with the idea, learn more about the process and how to get started.