Below is a checklist of the things you should consider to determine whether or not bankruptcy is the right choice for you:
- Will bankruptcy make a significant difference in your financial situation? If you're facing foreclosure or creditor lawsuits on a significant amount of debt, then filing bankruptcy may be right for you. Bankruptcy can help you save your home from foreclosure and allow you the opportunity to catch up on payments. It can also discharge unsecured debts such as credit card bills and medical debt.
- Is the majority of your debt unsecured? If most of your debts are credit cards, medical debt or other unsecured debts that have fallen into collections, then bankruptcy can be very beneficial. As we mentioned, bankruptcy allows debtors to discharge their unsecured debts, freeing up more money to pay unsecured debts such as a mortgage, student loan or child support payments.
- Do you think it will take you more than 3 to 5 years to pay off all of your debts without bankruptcy? If you feel that your financial situation will not be improving anytime in the near future and that you won't be able to repay your debts within 3 to 5 years, then you would probably benefit from filing bankruptcy. Even Chapter 13 bankruptcy allows debtors to repay their debts in a 3 to 5 year window while discharging some unsecured debts at the end of the term if the debtor was unable to repay them. This is not something that can usually be done outside of bankruptcy.