Is Bankruptcy the Right Option for You?

Law Blog

Bankruptcy is not a decision to make lightly, as this financial move shows up on your permanent credit rating for many years and may affect your ability to get credit cards, a loan, and so on. However, it also offers relief from debt that is taking away money you might need to pay your bills and relief from the daily stress you might feel because of your debt. Since the decision is not one to be made lightly, you should discuss the option with a bankruptcy attorney, but note a few signs that it might be time to make that appointment.

Consider how long it would take you pay off your debt 

It can be good to sit down with a calculator and actually figure out how long it would take you pay down that debt if you continued to make the payments you do right now. An accountant can help you with this if you don't understand how interest rates are calculated and compounded for your bills in particular. You can then consider the number of years it would take to pay off that debt; is it just a few at the most? You might consider continuing to pay them.

However, if it would take you many, many years, even decades, to actually pay off your debt, you might consider bankruptcy. There is no rule as to how many years it would take to pay off your debt before you should consider making this move; the point is simply that relief from your debt may be such a long way off that bankruptcy is a better option.

Note the amount of your income that goes toward your debt

Even if it would take just a few more years to pay down your debt, note the amount of income you use toward your debt. Are your payments interfering with your ability to pay your rent or mortgage, or buy necessities?

Note too if you might use the money you are currently spending on debt for things such as saving for retirement or emergencies. If you have no savings account right now because of paying all that debt, what would you do in case of a medical emergency that is not covered by insurance, or if your car were to break down and need expensive repairs? While paying your debt is an important part of your overall budget, you may need to consider bankruptcy simply so that you can continue to pay your bills and just survive financially.


27 July 2016

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