How Do You Know When It’s Time to File Bankruptcy?

iStock_000014217415_LargeDeclaring bankruptcy doesn’t have to be intimidating or scary; in fact, the process is quite simple and can leave you feeling immensely relieved. Filing bankruptcy is often the best solution for people struggling with debt, but it’s not the only option.

You may be wrestling with the decision to either continue paying off debt or file bankruptcy. Sometimes, knowing when it’s time to file bankruptcy can be difficult. The short answer is to file when you have more debt than you could feasibly pay off, but situations are often more complicated than that.

Benefits of Bankruptcy

Both Chapter 7 bankruptcy and Chapter 13 bankruptcy offer what is called an “automatic stay”, which effectively stops all harassment, collection, repossession, and foreclosure actions.

Chapter 7 bankruptcy often allows individuals to walk away from most or all of their debt, completely free of it, within a few short months.

Chapter 13 bankruptcy can help you create an individualized repayment plan to give you the time and guidance you need to become debt free within three to five years.

Is It Time to File Bankruptcy or Should I Keep Making Payments?

While you shouldn’t be scared to file for bankruptcy, it is a serious endeavor and should not be taken lightly. If you have the means to continue paying off your debts without causing hardship on yourself, it may be better to do so.

In addition, if most of your unpaid debt is nondischargeable, such as student loan debt and income taxes, then neither Chapter 7 bankruptcy or Chapter 13 bankruptcy will likely be able to help you without proving undue hardship, which is very difficult.

However, if continuing to make payments will likely get you nowhere closer to becoming debt-free in the foreseeable future, you may want to consider talking with a bankruptcy attorney. Individuals that can only make the minimum payments on unsecured debt, such as credit card debt, may benefit from bankruptcy.

People who can do nothing more than make interest payments without ever getting to the principle would also likely benefit from filing bankruptcy.

Don’t be afraid to file bankruptcy. Many who file never have to give up any assets, and usually come out feeling like a weight has been lifted. Bankruptcy is a governmental right for people in America, so if you are struggling under the heavy burden of debt, take advantage.

Washington D.C. bankruptcy attorney Kevin D. Judd is here to help you achieve your goal of becoming debt free. For a free consultation, call or fill out an online form to learn how the Law Firm of Kevin D. Judd could be your gateway to financial freedom.



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