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Deciding whether or not to file bankruptcy can be tough, but before you make the choice, it's important to understand what, exactly, bankruptcy can and cannot do for you. Here are a few things that you need to consider before you decide to file for bankruptcy.
For one thing, filing bankruptcy should be your absolute last resort option. You shouldn't take it until you check out all of your other options, including selling your home, getting another job to pay off debt, or other options that can help you pay down your debt. You can also talk with your creditors; in general, they would rather work to make your payments easier to make rather than have you file for bankruptcy because they'll get more money if you actually pay off your debts.
Another thing to think about is the balance of your debts that are non-dischargeable. These debts will still be left standing after you file for bankruptcy, so if you have a ton of non-dischargeable debts, bankruptcy might not be the best option. One example of non-dischargeable debt is student loans, but if you can't make your student loan payments, the government will be able to help you change your payment plan so that you can continue to make your payments on time.
Also, take into consideration what filing for bankruptcy will do to your credit score. Bankruptcy will totally trash your score. Although it will be possible to rebuild your score over time, you'll have to spend significant amounts of time and effort getting your score rebuilt after your bankruptcy is declared.
Now, if you have sorted through all your other options, discovered that not too many of your desks are non-dischargeable, and know how you'll rebuild your credit score after you file bankruptcy, you may still want to move on with this plan. One thing that you can do to protect yourself is to choose some of your property to be exempt. Depending on your state's laws, you'll be able to choose different pieces of property to be exempt, which means that it can't be sold to pay your creditors and that you'll be able to keep it when you're rebuilding your life after bankruptcy.
So, if you're asking, "Should I file bankruptcy?" you should keep all these points in mind before you make your decision. Doing your research beforehand can save you extra heartache later on.
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