How to Decide If You Should File for Bankruptcy

Thursday, March 24, 2016, AM | Leave Comment

Bankruptcy is a serious legal action. It carries serious repercussions with it, but it can allow you to consolidate and manage debt that you could not manage otherwise.

The decision to file bankruptcy is one that should not be taken lightly. It can have serious legal ramifications.

Let’s examine four points to consider when deciding if you should file for bankruptcy.

How to Decide If You Should File for Bankruptcy

  • Your Earning Potential is Limited

    One of the most important criteria for bankruptcy is your debt-to-income ratio. If this ratio is low, which means you lack the income required to reasonably pay back your debt, then bankruptcy may be an advantageous option.

    Depending upon the type of bankruptcy you file, a certain number of your assets may be protected. This can allow you to keep important property such as your primary residence.

  • You Have Assets

    If you have assets you wish to protect, then bankruptcy may be a viable option. This can help prevent debtors from acquiring the property you need to live your life.

    Chapter 13 bankruptcy can allow you to repay your debts according to a repayment plan. This can help you keep ownership of most, if not all, of your property while limiting your debts.

    If you do have assets, and you are considering bankruptcy, then you should contact an Orlando bankruptcy attorney or one from your area. This will help to ensure that you have someone whom both knows bankruptcy law, and can fully protect your legal rights.

  • You Are an Individual

    According to Debt.org, 97 percent of bankruptcy filings are filed by individuals. This means that businesses tend to abstain from bankruptcy due to the numerous options they have for consolidating and limiting their debts.

    If you are an individual with a large amount of debt and a limited number of options, then you should consider bankruptcy.

  • You Have Too Much Debt

    If you have an overwhelming amount of debt from failed business loans or medical bills, then you should seriously consider filing bankruptcy. Doing so may allow you to consolidate and reduce debts that you would not be able to repay.

    The tricky thing about this circumstance is that “too much” can be a figure left up to the interpretation of your local legal system. You should always consult a lawyer to assess your unique legal and financial standings.

  • Bankruptcy is an Option

    The one thing to take away about bankruptcy is that it’s always an option, though it may not be the best one for your unique case. You should always consult a legal professional to ensure that you are protected by the law.

Filing for bankruptcy, when it is appropriate, can give you the fresh start you need in your life.

Author BIO

Anica Oaks is a Freelance writer and web enthusiast. Read some of her published work on her Google+ page.

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