In order to determine whether you should file a bankruptcy at all, the first thing I would suggest is, if you are having financial difficulty, you should consult with a bankruptcy attorney in your area that's experienced in consumer bankruptcy law, and they can give you your options. There's typically two chapters of bankruptcy that are available to consumers, which is Chapter 7 and Chapter 13. Depending on your income and your circumstances, one may be better than the other. The other alternative, there are non-bankruptcy alternatives as well, such as debt settlement, debt consolidation. You will want to speak with a professional in your area, so that you can best determine what your options are, and what's best for you.
Additional Info:If you are unable to get ahead, constantly faced with the decision of who to pay when your bills become due, you are easily a candidate for bankruptcy. If you find that while you don’t have to rob Peter to pay Paul, but you recognize that a large sum of money is going out each month to merely service your debt – not actually pay it off, then you are definitely a candidate for bankruptcy.
Bankruptcy exists to give good honest folks the ability to start over. Reboot their financial lives essentially. Once you get behind in debt, the interest payments, over limit fees, late fees and the like become overwhelming and it’s next to impossible to climb back out of that hole.
Starting over will allow you to save for retirement, start a family, and do other things with your life that without bankruptcy may never become possible.
On the other hand, if you owe only a few thousand dollars and you could easily cut back on some unnecessary expenses to pay that back, then bankruptcy likely isn’t needed in your case.
The type of debt you have may determine whether you should file bankruptcy. Certain types of debt are non-dischargable, including alimony, child support, priority taxes, and many student loans.
However, if you wait long enough – only three years, most tax debt can be discharged. While it’s very difficult to prove an undue hardship for student loan debt, there is a growing trend to discharge private student loan debt that is outside of the cost of education. It’s a complicated argument, and many bankruptcy attorneys are unaware of this trend, so be sure to consult with an attorney that practices in the areas of both student loans and bankruptcy.
We have filed bankruptcy for attorneys, doctors, military personnel with security clearances, business owners -- none of these factors should prevent a bankruptcy or cause a loss of employment or license to practice.
You have to pass a Means Test to file bankruptcy. This test examines your income and expenses and determines how much, if any, disposable income you have. This determines which chapter of bankruptcy you are eligible to file. There are numerous local rules of thumb that are applied during the means test analysis to determine the outcome. It’s important to file with the guidance of an experienced bankruptcy attorney to avoid running afoul of these local rules. This will ensure the best possible result.