With the pressures of student loan debt, stagnant wages, and the high cost of living, millennials have considerable financial stresses to manage. While bankruptcy offers a viable solution that can help a person get back on firmer economic footing, the decision of whether to file should only be arrived at after careful thought and consideration. To help you determine if bankruptcy is the right path, ask yourself these essential questions.

What Bankruptcy Questions Should Millennials Ask Themselves?

1. Do I Understand What Will & Won't Be Discharged in Bankruptcy?

Chapter 7 bankruptcy will eliminate most types of unsecured debt —most, but not all. And, unfortunately, student loans are not dischargeable in bankruptcy — neither is alimony, child support, or certain tax obligations.

First, think about all the kinds of debt you have. If you have significant unsecured debts besides student loans, such as credit card bills, past-due utility costs, or late rent or mortgage payments, bankruptcy is an option worth exploring.

2. Should I File Chapter 7 or Chapter 13?

In Chapter 7, the bankruptcy courts dismiss the unsecured debts described above. In Chapter 13 bankruptcy, the courts restructure existing debt into a long-term payment plan, in which the debtor repays what they owe via manageable monthly payments over the course of three to five years.

Chapter 7 is better suited to those with little or no income to realistically pay back what is owed. Chapter 13 is ideal for those who have some disposable income left for their scheduled payment at the end of the month. What type makes the most sense with your current income level?

3. Do the Benefits of Filing Outweigh the Risks?

Bankruptcy comes with some consequences that all potential filers should be aware of beforehand. The filing will stay on your credit report for up to 10 years, and it may be difficult in the months immediately after filing to secure new lines of credit. If you've been able to maintain a higher credit score despite your debt, that number will likely drop noticeably upon filing.

At the same time, bankruptcy is a way to reclaim your financial power and start fresh with a clean slate. It also gives you the opportunity to make sounder fiscal decisions moving forward. Do these benefits outweigh the risks for your particular situation?

To see if bankruptcy is right for you, contact Pearce Law Firm. For over 15 years, Attorney Allyson Pearce has been representing clients throughout Baldwin County, AL. She offers legal services in bankruptcies to ensure you’ll have an expert on your side to help you make the best choices for your financial future. Call (251) 971-2676 or visit her office's website to schedule a consultation.