Filing for bankruptcy protection should begin with asking yourself some serious questions. Otherwise, you may not be gaining the relief you had hoped for. You may even end up with more problems than you had to begin with.
One question you must carefully assess is whether or not you have the ability to pay your debt. This includes such factors as the amount of money you owe, how much and how regular your income is, and how much of your income you reasonably need for your basic living expenses. You may find that you can pay your debt without filing for bankruptcy protection. If not, this information will be a guide in determining which type of bankruptcy protection is best for you.
You should also consider your assets. Depending on the amount of type of property you own, and how willing you are to give it up to cover your debt, these are essential factors in making the decision to file for bankruptcy protection.
As bankruptcy protection will not cover all of your debts, you also need to know how much debt you owe that will not be covered. Whether you choose for your nonexempt property to be liquidated, or opt for a payment plan, it is essential for you to know in advance how much of your debt you will still be expected to pay.
Before you come to a final decision about whether bankruptcy is the best option for you, there are a couple of important points to consider. First, bankruptcy should never be considered a “quick fix” for financial problems, it is in your best interest if you have first checked into the bankruptcy alternatives that may be available to you. If you have found that none of the alternatives are suitable in your particular situation, you should then gain all of the facts about the types of bankruptcy protection so you will know what applies to you.
As filing for bankruptcy protection must be considered the last resort in coping with financial extremes, you should also keep your credit rating in mind. Regardless of the form of bankruptcy that applies to your situation, it will have a negative impact on your credit rating. This can influence your ability to obtain credit, and even some aspects of your personal life, for up to ten years.
Filing for bankruptcy protection is not without its drawbacks. If you have put careful thought into it and have determined that it is the best course of action for you, it still can be the right solution.