Filing for bankruptcy has helped many people get out from under their mounting debt. While this option is worth considering if you’re overwhelmed by financial obligations, the decision shouldn’t be taken lightly. There are several factors to think about when determining whether this is the best course of action. Below, The Law Office of Christopher J. Swatosh of Ava, MO, explains how you can determine your candidacy for bankruptcy.
You Meet the Eligibility Requirements
Before petitioning for bankruptcy, make sure you meet the income eligibility requirements. Chapter 7 filings require borrowers to a means test that shows they don’t have enough disposable income to pay the creditors. Under Chapter 13, your debt-to-income ratio must show that you can follow a repayment plan.
The Debt Can Be Forgiven
Not all debts can be discharged in bankruptcy. Only unsecured debts like credit card bills, personal loans, and medical bills are eligible for discharge. A bankruptcy will only be effective if most of your debts fall into this category rather than secured debts, which must be paid by the borrower.
You Don’t Have Other Options
There are different alternatives to bankruptcy that should be considered before making any decisions. If credit counseling, a debt management plan, or reconfiguring your household budget will resolve the issue, then bankruptcy might not be appropriate. If you don’t see any other way out of this predicament, then filing may be the right course of action.
You’re Comfortable With the Consequences
As helpful filing bankruptcy can be, it comes with some consequences. The petition will become a matter of public record that anyone can see. It will also impact your credit rating for several years, and there’s a chance you could lose non-exempt property as a way to pay back creditors.
If you have evaluated each of these factors carefully and believe bankruptcy is the best option, it may be time to start the filing process. Working with an attorney will ensure your paperwork is completed correctly and minimize the chances of the case being rejected. Contact The Law Office of Christopher J. Swatosh at (417) 683-2987 to learn more about your options, or visit them online for additional information.