Well, to answer that question accurately, you need to perform a thorough evaluation of your finances with the help of a financial advisor and a bankruptcy attorney. However, keep this following thought in mind in order to have a good idea about where you stand at the moment. Can you pay all of your debts off in the next three years while you continue to live a reasonable standard of living? If not, then bankruptcy should be seriously considered.
What can I gain by declaring bankruptcy?
Bankruptcy can halt foreclosures , lawsuits, and wage garnishments. It can stop you from being evicted as long as you file bankruptcy before your state court enters a judgment. Bankruptcy can also stop repossessions and IRS seizures.
What bankruptcy is not
The United States bankruptcy laws are meant to help honest people who are overwhelmed with their debt and are not supposed to be used by anyone trying to game the system. Do not choose bankruptcy if you are trying to get back at someone or are simply trying to avoid paying child support or other financial obligations. Also, you should never threaten to declare bankruptcy if you’re not serious about it.
Bankruptcy will not prevent you from being prosecuted for crimes. Chapter 7 will not eliminate unpaid child support or alimony, although a Chapter 13 repayment plan can help you catch up on these kinds of payments. Other obligations which are not generally eliminated in bankruptcy include student loans and criminal fines. Also, if a friend or family member cosigned your loan, he or she would still be responsible if you declare bankruptcy. You can prevent your cosigner from having any problems by filing Chapter 13 (which requires you to repay the loan over time).
Immediate relief
As soon as you file a bankruptcy petition, the automatic stay goes into effect and your creditors are prohibited from even contacting you (let alone repossessing your property or filing a lawsuit against you). A creditor must ask for permission to continue with repossessions or foreclosure proceedings. At the very least, this can give you some breathing room while you begin your bankruptcy case.
Of course, this provision is only temporary, and the outcome of your bankruptcy case will determine what exactly happens to all of the debts that you were unable to pay off previously. Even so, the bankruptcy automatic stay provision can give you some real relief when you figure out what to do.
If your Chapter 7 bankruptcy case is successful, you may be able to discharge much or all of your debt. If you decide to file Chapter 13 bankruptcy instead, you will be given a chance to make monthly payments through a restructuring program. Either way, you should find it much easier to deal with repayments.