The decision to file for bankruptcy is never an easy one. It takes careful consideration and depends on a number of factors. Before making the decision to file for bankruptcy, ask yourself these questions.
Have All Other Options Been Exhausted?
Bankruptcy is not the only option when it comes to debt relief. It often helps to first meet with a bankruptcy attorney to discuss your options. A budget is one tool a consumer can use to see what unnecessary expenses can be eliminated, freeing up additional funds to pay off debts. The consumer may also have luck in selling some of his or her assets to pay off various debts. Another option is for the consumer to reach out to his or her lenders to see if some type of payment plan or debt settlement can be reached on the debt.
The consumer may also consider credit counseling. This step should be taken even if the consumer is considering filing for bankruptcy since credit counseling, including a two-hour financial management course from a government-approved agency, must be completed at least 180 days before a bankruptcy discharge is issued.
Do You Have Enough Debt to Justify Filing for Bankruptcy?
While there is no minimum amount of debt required to file for bankruptcy, it helps to analyze your debt-to-income ratio. If the level of the debt the consumer has is relatively minimal in comparison to his or her income and assets, it may make more sense to seek other options in lieu of filing for bankruptcy.
How Much Debt Will Bankruptcy Eliminate?
While bankruptcy cases eliminate most consumer debt, they do not eliminate everything. Certain types of debt will stay with the consumer, such as secured debts attached to a car or a home. Child support and spousal support obligations, as well as property liens, will also survive a bankruptcy case. Additionally, student loan debt, including both federal and private, can be difficult to discharge. On the other hand, if the consumer is carrying a large amount of unsecured debt, including credit card debt, utility debt, medical bills, and personal loans, a bankruptcy case will be an excellent vehicle to discharge this debt.
Do You Make Too Much to File Bankruptcy?
Debts are not the only factor considered in filing for bankruptcy. The consumer’s income will also be a consideration. If the consumer wishes to proceed with a Chapter 7 bankruptcy case, his or her monthly income must be less than the state median income to pass the “means test” required to file. If the consumer’s income does not pass the means test, he or she may still also be able to proceed with a Chapter 13 bankruptcy case.
Are You Being Contacted by Multiple Debt Collectors?
One of the best benefits of filing for bankruptcy is the automatic stay. What this means is with the opening of a bankruptcy case, the filer’s creditors are prohibited from pursuing collection efforts against the consumer. If the individual is facing multiple communications from debt collectors and creditors daily, filing for bankruptcy could be a good way to find relief from this harassment. It can also protect a person from lawsuits, wage garnishment, repossession, and losing valuable property. As soon as the bankruptcy petition is filed, the automatic stay goes into effect.
Have You Spoken with a Legal Professional Regarding Your Options?
Lastly, before making the official decision to file, a consumer should speak with an experienced bankruptcy attorney to ensure that he or she understands whether the timing is right to file, as well as the implications of what a bankruptcy will have on his or her life. Filing for bankruptcy is a major decision, one that should not be taken lightly. It is for this reason it is always recommended that a professional examine the consumer’s specific situation first before making any major decisions.
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If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.
