5 Questions You Should Ask Before Filing For Bankruptcy

If you are struggling with debt, one of the options that can help you start over financially is bankruptcy. In fact, sometimes, bankruptcy is the best option. However, you should know that bankruptcy is not for everyone. Before filing for bankruptcy, it is also crucial that you understand all your options and what you are getting yourself into.

If you’re considering filing for bankruptcy, you should do a bit of self-reflection. You need to ask yourself some questions before filing for bankruptcy. The following are five questions you should ask yourself before filing for bankruptcy.

Question #1: Have I exhausted all my other options?

Bankruptcy is a powerful solution to overwhelming debt. However, bankruptcy is not your only option if you are struggling with debt. There are several other options you can consider before filing for bankruptcy. For example, have you contacted your lenders to see if they can work out a payment plan? Have you eliminated unnecessary expenses? You can also consider debt settlement and loan modification. Debt settlement is when you offer a lump sum payment to a lender in exchange for them forgiving a portion of your debt. On the other hand, loan modification is when a creditor changes the terms of your loan.

Question #2: Have I discussed my options with a professional?

Bankruptcy is a huge decision that can have far-reaching effects on your life. It is vital that you discuss your options with a qualified professional before proceeding to file for bankruptcy.

Question #3: Do I qualify for bankruptcy?

If you have exhausted all your other options and believe bankruptcy is the only option left, you need to ask yourself whether you qualify for bankruptcy. Chapters 7 and 13 are the most commonly filed forms of bankruptcy. So, if you file for bankruptcy, you will most likely file a Chapter 7 or Chapter 13 bankruptcy. For example, you must pass the means test to be allowed to file a Chapter 7 bankruptcy.

Question #4: Which option is best for me?

Before filing for bankruptcy, you need to ask yourself which option is the best for you. As already stated, Chapters 7 and 13 are the most commonly filed forms of bankruptcy. In a Chapter 7 bankruptcy, you give up your non-exempt assets to the bankruptcy trustee, who liquidates the assets and distributes the money to creditors. Whichever debts remain unpaid, with a few exceptions, are then discharged. On the other hand, with Chapter 13 bankruptcy, you agree to a payment plan spread over a period of three to five years.

Question #5: How will bankruptcy filing affect my credit ranking?

One of the consequences of bankruptcy is its effect on a person’s credit rating. Filing for bankruptcy will lower your credit score. And usually, the better your score before filing for bankruptcy, the more it will drop when a bankruptcy order is entered. Unfortunately, a low credit score can make things such as applying for a job difficult. However, the good news is there are several ways to improve your credit rating after bankruptcy.

Contact a Pennsylvania Bankruptcy Attorney Today

Contact a qualified Lehighton & Carbon County bankruptcy attorney at Adam R. Weaver if you are struggling with debt and need legal guidance.