Four Factors to Consider to Know If Filing for Bankruptcy is the Right Solution for You

If you are considering filing for bankruptcy, you don’t need to have enough debt to do so. It comes down to your specific financial situation, the kind of debts you have, and your means to pay them off. But, while there is no minimum debt requirement to file for bankruptcy, you should know other issues that impact your qualification. Most importantly, you should meet with a Vohwinkel Law bankruptcy attorney to explore your options and know if bankruptcy is the right solution for your situation. Here are some factors you can consider before you file for bankruptcy:

Your Capacity to Pay Off Your Debts

You need to evaluate your income. If you file for Chapter 7 bankruptcy, you will take a means test to assess your income and compare it to the standard in your area. Thus, if your income is well above average and you have a disposable income to pay down your debts, you won’t qualify for Chapter 7. But, you have other options. You could file for Chapter 13 bankruptcy which allows you to create a repayment plan and submit it to a bankruptcy court. Once approved, you will have to make a single monthly repayment to your creditor. 

Your Situation with Your Creditors

Creditors may make continuous calls and contacts to try to recoup what you owe them. And if you want to legally stop those annoying calls, you may want to file for bankruptcy. Because creditors won’t get much from you when you file, most of them may work with you to arrange a more favorable payment term or even lower interest rates. But, if they refuse to work with you, you may need to file for bankruptcy and get relief. 

Qualification of Your Debt for Bankruptcy

The kind of debt you have will have a say in your qualification for bankruptcy. If you have $12, 000 in debt, most of which are from student loans, bankruptcy may not be the right choice for you. If you file for Chapter 7 bankruptcy, some debts such as child support, alimony, student loans, and back-owed taxes cannot be discharged. 

Your Employment or Financial Situation

Losing your job may make you panic and think about filing for bankruptcy. But, if you can return to work in only a month or two, filing for bankruptcy may not be the right financial move. But, if you have become permanently disabled and can’t work or you suffer from a serious medical condition that has forced you into debt, you may be qualified to file Chapter 7 bankruptcy.

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