7 Questions to Ask Before Filing for Bankruptcy

Nearly half a million bankruptcy filings occurred in the U.S. in 2023. 

People go that route for many reasons. But the common denominator is a heavy debt albatross that has bankruptcy filers falling behind rather than making headway. While it’s best to avoid situations that make bankruptcy an option, filing for one isn’t the end of the world. It can be the start of a new beginning. 

Even so, you shouldn’t file for bankruptcy before assessing your situation, considering all options, and determining the best path forward. Speaking to a bankruptcy lawyer with experience helping people in your situation is a good idea. You can get answers to questions that’ll equip you to make informed decisions about what to do.

Here are seven questions to ask if you’re considering a bankruptcy filing.

7 Questions to Ask Yourself Before Deciding Whether to File for Bankruptcy

Have I Considered All Other Options?

Before deciding if bankruptcy is the right option, you should consider other alternatives. Selling assets to generate cash you can use to pay off debt is worth mulling over. Another option is contacting lenders to arrange a payment plan if possible.

You should also comb over your budget and eliminate things that aren’t necessary. Doing so might help you avoid a bankruptcy filing.

Will a Bankruptcy Filing Eliminate All My Debt?

It’s also vital to consider whether all your debt can be eliminated through bankruptcy. If you ask a bankruptcy lawyer this question, they’ll tell you that bankruptcy won’t discharge certain kinds of debt. Student loans, child support, secured debt like mortgages and car loans, and alimony won’t be eliminated through a bankruptcy filing.

Is My Debt Load High Enough to Warrant a Filing?

While a bankruptcy filing can help you turn over a new page, it will negatively impact your credit for several years. So, you must carefully consider if you have enough debt to warrant going that route. After tallying it up, you might think twice about filing for bankruptcy.

Do I Earn Too Much to File for Bankruptcy?

Depending on your income, you may make too much to file for bankruptcy. For instance, your monthly earnings must be south of the median income in your state if you want to pursue a Chapter 7 bankruptcy.

What Types of Bankruptcy Options Are There?

There are two kinds of bankruptcy you should know about. On the one hand, there’s Chapter 7, which allows filers to wipe out their unsecured debt after a certain time. On the other hand, there’s Chapter 13, which permits filers to eliminate unsecured debt as they catch up on secured debts such as car loans and mortgage loans.

Are Debt Collectors Stressing Me Out?

If you have debt collection agencies calling you day after day, that can get tiring and stressful. After filing for Chapter 7 or Chapter 13, these annoying agencies must refrain from contacting you. That will allow you to breathe a sigh of relief.

Will I Lose My Property in a Bankruptcy Filing?

You’ll be pleased to learn that a bankruptcy filing won’t deprive you of necessary property like equity in your home, a vehicle needed to get to and from work, clothing, and furniture. If you have questions about what assets can be protected after a filling, a bankruptcy lawyer is the best person to ask. You’ll get the right advice to guide you through the process.

Getting answers to questions like these is essential. You can’t make an informed choice if you don’t have answers. A bankruptcy lawyer is the best resource for the information you need and will file a bankruptcy on your behalf if that’s what you decide is best.