For most people, the decision of whether or not to file for bankruptcy is not one to be taken lightly. After all, there are implications that go along with the decision. Today we’d like to take a look at a few things you should think about and discuss if you find yourself making the decision of whether to file for bankruptcy.
First of all, it’s important to reiterate that everyone’s situation is unique, and there are no “one-size-fits-all” approaches to handling financial matters. Similarly, not everyone is in the same place in life either, and all those factors need to be taken into account when making a big financial decision such as whether or not to file for bankruptcy. Because of the case-by-case nature of bankruptcy, it’s always best to consult a qualified bankruptcy attorney to discuss your options and to explain your specific situation. These attorneys are trained and are experienced and will be able to give you advice based on the information you have given them.
That being said, there are a few things most people can think about when deciding whether or not to file for bankruptcy – these are very common considerations which are likely to apply to many people, despite their different places in life and different situations.
First of all, if you do decide filing for bankruptcy is your best option, you’ll have to determine which type of personal bankruptcy to file. This decision is best made in consultation with your attorney, as each type makes sense in certain situations. Chapter 13 bankruptcy creates a repayment plan in which the filer uses a payment plan to pay off his or her debt in three to five years. This is often chosen if there was a temporary event that caused someone to get behind financially, such as a loss of a job, that has since been rectified. Chapter 13 allows you to keep your assets while requiring you to repay your missed payments via your payment plan.
Chapter 7 bankruptcy wipes away all debt, and this option is often chosen when debt is extremely high or when there is simply not enough income to come up with a payment plan. There are laws requiring being qualified for chapter 7, so this is not always an option for everyone.
Another thing to consider is whether you’ve had a major life even lately. Maybe completely out of your control, a major medical event, divorce, or loss of a job might have increased your debt significantly or reduced your income significantly. A qualified attorney can help you evaluate your situation and help you decide what your options are.
There is then the matter of considering how bankruptcy will affect your credit. Typically, a bankruptcy will stay on your credit report for about ten years. But, depending on what your current financial situation is, a bankruptcy can actually help improve your credit score in as little as a year or two. If you’ve missed payments and have bill collectors or other agencies reporting your missed payments, getting on a chapter 13 payment plan together and starting to rectify the debts and missed payments can actually help you to boost your credit score. If, however, you have plans to buy a house in the next few years, or if you know you will need an auto loan or need to take out a line of credit, you may want to re-consider bankruptcy unless it is absolutely necessary. It might be very hard to make any of these things happen with a recent bankruptcy on your credit report.
If you have any joint accounts, another thing to consider is how bankruptcy will affect these. While bankruptcy will dissolve your financial obligations, if you have a spouse or someone else on a joint account, that co-signer will now become solely responsible for the debt. This is common after a divorce. One way to avoid this from happening is to pay off the debt before filing or by placing the debt into only one person’s name.
Finally, it is important to know that filing for bankruptcy is a matter of public record. Anyone who is interested can look into this information. Many times, people don’t realize this or bother to look; however, you should be aware that it will be a matter of public record and available for anyone who would want to look into it. Depending on your public profile, this piece of information might help you make your decision.
At Burr Law Office LLC, as expert Milwaukee bankruptcy attorneys, we want to help you make the right decision for your unique situation by taking all the factors into account. If you are considering bankruptcy as an option, talk to us and get the benefit of our expertise and experience. Call today!