3 Ways to Know if Bankruptcy Is Right for You

Submitted by Rachel R on Mon, 01/27/2014 - 6:53pm

3 Ways to Know if Bankruptcy Is Right for You

Three questions to ask yourself

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Bankruptcy is never something to enter into lightly. It's not a way to ditch your debts and skip merrily away without a care in the world. It should be carefully considered and you should only opt for it if you're certain it's the best course of action for your particular circumstances. So how can you know? Check out three questions to ask yourself to know if bankruptcy is right for you...

#1 Have You Considered All Other Options?

Bankruptcy should be the course of last resort and only for those that are completely overwhelmed by their debts and in an unmanageable scenario. Talk to your creditors and explain your circumstances and see if they will work out repayment terms you can afford. If you can get all of your lenders on board with a plan to dig out of debt, that's the route to try first. Could you take a second job in the short term until your debts are under control? What's not a good idea is accumulating more debt to service existing debt such as taking out a title loan to pay off past due credit card balances.

#2 Are Your Circumstances on the Upswing or Likely to Continue?

If you're experiencing a temporary hardship like unemployment that has you behind on your debts, but you've found a new job, you are on the upswing and should be able to get your bills caught up if you can get your lenders to extend terms or be a little patient. If, however, you have suffered an accident or are experiencing health problems that have left you with limited capability to work or if your job skills are obsolete and you can't afford training to get you current so you are unemployed or drastically underemployed, you may need to explore an option that will get you a clean slate.

Questions you should ask yourself (or an attorney) about bankruptcy

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#3 Are You Mathematically Bankrupt?

You are considered insolvent when your debts far outweigh your assets. For instance, if your home value has dropped and you are upside down on your mortgage, upside down on your car note, owe student loans, credit cards and medical bills, you may be mathematically bankrupt. If these are your circumstances and you have no money in the bank, have maxed out your credit on all fronts and your income doesn't allow you to make a dent in your debts, you can only make minimum payments and your balances are rising each month, you likely need a better solution.

If your answers to these three critical questions indicate that you are in over your head and have no mechanism to recover and get yourself on the road to becoming debt free, Chapter 13 or Chapter 7 bankruptcy may be the best way to get a financial fresh start and the peace of mind that comes with it. To find out whether your particular circumstances qualify you for bankruptcy, contact the law offices of John T Orcutt for a free consultation today at one of our convenient North Carolina locations.

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