When debt begins to pile up and you can no longer afford to pay back your creditors, you might consider bankruptcy as a solution. This choice can be highly personal, especially if your finances were impacted by job loss or another unexpected financial blow. While personal bankruptcy could help you discharge or reorganize your debt, there are a few factors you may want to consider before you decide to begin the process.
1. Other Option Choices
As you consider filing for bankruptcy, it can be important to understand whether you have other options as well. If you can handle your debt outside of the process, then this may have less of an impact on your long-term finances. Bankruptcy can remain on your records for up to 10 years, so if your creditors are willing to work with you, it may be worth it to look into these other options before making a decision.
2. Chapter 7 Versus Chapter 13
The bankruptcy style you choose can also affect your financial future. Chapter 13 bankruptcy allows you to reorganize and pay back your debts over a period of several years without having to sell your home or vehicles to do so. Chapter 7 bankruptcy typically requires the liquidation of your assets, the proceeds of which are then used to pay your debtors. A bankruptcy attorney can help you decide which process best suits your needs.
3. The Amount of Your Debt
One factor to remember about bankruptcy is that there is no minimum limit you must reach for either type of program. Chapter 13 does limit the maximum amount of debt you have, depending on the secured or unsecured amount. This amount changes on occasion to adjust for inflation, so you may want to check with your attorney about the current maximum.
4. Plans for Future Purchases
Because bankruptcy can affect your finances for nearly a decade, careful planning is required in light of any major purchase plans you may have for the future. Buying a home, a vehicle or even renting an apartment usually requires that debtors pull your credit history, and a recorded bankruptcy could seriously affect your ability to secure future credit. While circumstances may give you few other options, considering your future finances may be a wise move before you make a final choice to declare bankruptcy.Having to declare bankruptcy can be a harrowing decision, but you do not have to endure it alone. Contact a bankruptcy lawyer in Cypress, TX, like from Winfrey Law Firm, PLLC, today for further advice and information or to schedule an initial appointment.