Filing bankruptcy can be a strategic maneuver for taking back control of your life, but it is not necessarily a universal approach for managing debt or regaining your financial footing. If you are facing an overwhelming amount of debt, the best approach for your situation will ultimately depend on a variety of factors. Below, the Law Office of James B. Mallory III in Statesville, NC, lists a few of the most important factors to consider.
3 Factors to Think About Before Filing Bankruptcy
1. The Amount of Debt
There is no minimum amount of debt required for filing bankruptcy. But since discharging debt will affect your credit score and remain on your credit report for up to a decade, it is only wise to file if you owe lenders an unreasonable amount of money. Because everyone’s financial situation is different, there is no set amount that is deemed unmanageable. Rather, debt is unmanageable if you cannot afford the minimum payments every month or are constantly sacrificing elsewhere to make those payments.
2. The Type of Debt
Declaring bankruptcy can effectively eliminate medical bills and credit card debt, but it cannot discharge past due child support or alimony, priority tax debts, criminal restitution obligations, student loans, or personal injury awards incurred from driving while impaired. Therefore, if most of your debt falls under the latter categories, filing bankruptcy will not provide the financial relief you need.
3. Your Income
Your ratio of income to debt should be a deciding factor when it comes to declaring bankruptcy. Those who have essentially reached their maximum earning potential or are already working two or three jobs to make ends meet can likely justify discharging applicable debts. On the other hand, those who have a lot of debt but also have a high income or are on a lucrative career path may be able to pay off their obligations in a couple of years by making a few strategic financial maneuvers and sticking to a budget.
If you need debt help or are considering filing bankruptcy, turn to the Law Office of James B. Mallory III in Statesville, NC. For almost three decades, attorney Mallory has been helping clients get back on their feet. He understands that people accumulate debt for countless reasons, and at the end of the day, all that matters is admitting the problem is bigger than you are and asking for financial help, which he is happy to provide. You can contact attorney Mallory by visiting his website or calling (704) 872-1911.