There is often a lot of stigma attached to the mere idea of bankruptcy that is rarely rooted in what it actually means to go bankrupt. As such, many who are deep in debt might try to avoid it even when it is their best chance at rebuilding a better and healthier financial future. That said, bankruptcy is not the only option, so it is important to fully understand and grasp the details of your situation and your choices to ensure you make the right decision.
What is Bankruptcy?
When an individual files for bankruptcy and the court grants it, it essentially means that you are unable to repay all of your outstanding debts. Depending on the type of bankruptcy you file for, the court could structure a plan that will enable you to pay a good portion of your debt back and discharge the rest, or liquidate your assets to repay as much as possible and discharge the remaining debt. You will also likely be required to enter debt counseling. Whichever path you end up taking, bankruptcy is not something that happens to a person; it is a status that must be applied for and granted by the court.
Is Bankruptcy Right for Me?
Although bankruptcy is effective for handling debt, it is not the most suitable solution for everyone, which is why it is vital to consult with a bankruptcy attorney before settling on a decision. You can begin by asking yourself some questions:
- Will bankruptcy cover the debts you are struggling with? Keep in mind that bankruptcy does not cover all debts. For example, if you are struggling with student loans, these will not get discharged simply by filing for bankruptcy. Tax debts are also generally not covered by bankruptcy.
- Do you understand what you might lose? Filing for a Chapter 7 bankruptcy means that you will have to liquidate your assets. You could potentially lose your home or other valued possessions, so if you do not think you can handle these losses, you might want to consider a Chapter 13 bankruptcy or another course of action altogether.
- How will bankruptcy affect your family? Whether you lose a lot of what you own or have to spend the next three to five years paying off reorganized debt, this could deeply affect others in your life, so that might factor into your decision-making as well.
What Are the Alternatives?
Bankruptcy is not the only option available, so if you are not sure if it is appropriate for your situation, it would be wise to investigate the alternatives. Other options you might also want to consider include:
- The Fair Debt Collection Practices Act (FDCPA): If your primary goal is to stop creditors and collection agencies from harassing you, you might want to look into the FDCPA, which protects debtors. Debt collectors are, of course, allowed to contact you, but there are limits to what they are allowed to do, so if you think they have crossed a line, you might be right.
- Credit Counseling: In some cases, people are fully capable of paying off their debts, but are simply unsure of how to go about it. Consider credit counseling to create a plan that will allow you to pay your debts in the most efficient way. With a credit counselor you will learn how to responsibly manage your finances, so you can avoid struggling and falling behind on paying your bills.
- Debt Consolidation: With debt consolidation, you can transform multiple debts into one, turning it into a single, lower monthly payment with reduced interest rates. Oftentimes, this is done by taking out a loan equal to the amount of your debts, which is used to pay them off, so that you only have to worry about one debt.
Northbrook Bankruptcy Attorneys
If you are struggling with debt and are considering your options, you need to reach out to an experienced bankruptcy attorney to find the best solution for your circumstances. At Bach Law Offices, our team of Northbrook bankruptcy attorneys will help you navigate your financial issues, so you can achieve the relief you need from mounting debt and harassing creditors.
Get started on your case today and call Bach Law Offices at (847) 448-0025 to schedule a free initial in-person consultation.