Bankruptcy should be your last resort. The bottom line is that if it doesn’t help you, you should avoid filing. If you are thinking about filing, ask yourself some questions:
Will Bankruptcy Get Rid of My Debts?
Bankruptcy, whether Chapter 7 or 13 doesn’t get rid of all debts. Alimony and child support are not dischargeable. Court restitution isn’t dischargeable. Student loans are so difficult to discharge, they may as well be classified as non-dischargeable. These are just some of the types of debts that bankruptcy doesn’t eliminate. You should consult with a bankruptcy attorney to see if your debts will be eliminated.
Will Bankruptcy Give Me the Debt Relief I Need?
One of the things that I go over with potential clients at their free consultation is their budget. We look at their income and expenses and see what debts, if any, would be eliminated in bankruptcy. If bankruptcy wouldn’t provide the kind of relief from debt they need, then we talk about some other options. For instance, I met with someone recently who was basically living on credit cards. In fact, she was taking cash advances of about $1,000 a month to make ends meet. In turn, she was paying her credit card companies about $600 a month. Even if she got rid of her credit card debt in bankruptcy, she would still need to figure out how where she was going to either cut $400 a month in expenses or find another $400 in income. At the end of our consultation, I told her that I wasn’t sure that bankruptcy was a good option right now.
If you will still be struggling to make ends meet after you file bankruptcy, you might want to think twice about filing. You may need to consider your expenses and see where you can make more cuts. Take the credit counseling course required to file bankruptcy, even if you aren’t sure you’re going to file. You may have to take more drastic measures like moving in with a family member to reduce living expenses. Bankruptcy can provide significant relief, but there are some cases where filing alone won’t be enough.