You’re thinking of declaring bankruptcy. You have been dealing with debt for longer than you can remember, and it just keeps getting worse.
Before you do, ask yourself these three questions so that you know exactly how to proceed:
1. Does bankruptcy work for the type of debt you have?
Not all debt qualifies. For instance, you likely cannot discharge tax debts or student loans. There are ways to eliminate student loans in unique situations, and the IRS does offer repayment options for taxes, but that does not mean you can just file for Chapter 7 bankruptcy to get rid of them.
2. Which type of filing is best, Chapter 13 or Chapter 7?
Chapter 7, or liquidation bankruptcy, forces you to sell off nonexempt assets and pay as much of the debt as possible, before erasing the rest. Chapter 13 gives you a repayment plan with affordable monthly payments, based on your income. The type that is right for you depends on many factors, from how much debt you have to how much you earn each month.
3. What will the financial impact look like in the future?
Generally, a bankruptcy filing remains on your credit report for the next decade. This does lower your score, potentially making it harder to get loans and lines of credit. You have to weigh that against the impact to your credit score if you keep missing monthly payments because you cannot afford the debt that you already have.
After you ask these questions, take some time to look into all of your bankruptcy options to determine which one are best for you. You can contact the Quinn Law Firm for a free bankruptcy consultation by calling 814-833-2222.
Source: Nerd Wallet, “5 Questions to Ask Before Declaring Bankruptcy,” Anisha Sekar, accessed June 06, 2018