The decision to file for bankruptcy should not be made lightly. If will have a significant impact on your credit for up to 10 years. It’s always a good idea to look for other ways to whittle down your debt, such as by negotiating with creditors.
Sometimes, credit counselors can help you bring down your interest rates and decrease your monthly payments. They may be able to help get creditors off your back if you’re receiving constant calls from collection agencies.
However, if one or more of the following are true for you, it’s possible that bankruptcy is your best bet for getting out from under your debt:
Creditors are suing you to get their money back
They may also begin garnishing your wages to recoup some of that money. Bankruptcy can put a stop to the garnishment, and you may be able to get some of your garnished wages back.
You have extensive medical bills
This is one of the primary reasons people file for bankruptcy. Even with insurance, an injury or illness can result in overwhelming medical bills. You may be able to discharge some or all of those bills in a Chapter 7 bankruptcy. With a Chapter 13 bankruptcy, you can work out a repayment plan to deal with them over three to five years.
Your debts are greater than your assets
If that’s the case — particularly if you have little or no savings — bankruptcy may be your best way out of your financial woes.
It’s always best to seek experienced legal guidance before deciding whether to file for bankruptcy and what type of bankruptcy is appropriate. A bankruptcy attorney can also help you through the process to increase your odds of completing the process and working toward a strong financial future.