Three situations where bankruptcy may be right for you

If you are undecided about whether to file a bankruptcy case, a quick run through this checklist may help make your decision a little easier:

1. Will a bankruptcy case make a significant positive difference in your financial situation? If you are facing foreclosure, are at least four months behind on your debt payments, or otherwise have a poor credit score, the negative impact of bankruptcy on your credit rating will be negligible, while the positive impact of discharging the bad debt may be substantial.

2. Do you have a preponderance of unsecured debts? These are typically credit cards and medical bills, but this category also includes utility bills and personal loans. If most of your debts are unsecured, eliminating them with a Chapter 7 bankruptcy case can free up a lot of cash each month to pay your secured debts, which include mortgages and car loans.

3. Would it take you more than five years to pay off all your bills without a bankruptcy? If so, you would probably benefit from a bankruptcy case; even a Chapter 13 filing allows you to pay your creditors as much as you can afford over a three to five year period, with the remainder of the debt usually discharged after you fulfill that obligation. “Debt settlement” options may take just as long, cost more, and still leave you with half the debt to pay.


By Doug Beaton

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