While filing bankruptcy is a last resort, you still have choices in terms of the type of bankruptcy to file. If you have few assets, a Chapter 7 bankruptcy allows you to have your unsecured debts discharged. Alternatively, filing for Chapter 13 bankruptcy involves setting up a payment plan that provides you with more time to repay your debts. This guide can help you determine which type of legal action is preferable in your situation.

3 Signs That Filing Bankruptcy Is the Right Step

1. You Can’t Meet Your Financial Obligations

Whether you’re paying bills directly with your credit card, or you’re transferring balances to new cards, this is a clear sign that you need debt relief immediately. You can address credit card debt in either a Chapter 7 or a Chapter 13 bankruptcy. In choosing between the two types of bankruptcy, your decision should be based upon your assets versus the amount of debt you have. If you can repay your debts over a period of time, or via the liquidation of your assets, a Chapter 13 filing would be best.

2. Your Credit Score Has Dropped 

When you’re not paying your debts on time or defaulting on them altogether, your credit score will continue to drop. Over time, this situation will worsen, leaving you with a credit score that is far lower than that which would result from filing bankruptcy.

On the other hand, filing bankruptcy will alleviate your unsecured debts (credit cards, medical bills, personal loans), leaving you with secured debts, such as mortgages, car loans, and child support payments. This provides you with an opportunity to begin rebuilding your credit score via on-time payments and secured credit cards. In just a few months, you can begin to see your credit score rise.

3. You Can’t Pay Extra

If you’re unable to start putting away a little money each month to put toward your debts, bankruptcy can offer you the chance for a fresh start. A Chapter 13 bankruptcy will involve a court-approved repayment plan that is within your financial means. A restructured payment plan will leave you with the money you need to make those payments and leave you with a little extra to put away each month. It may take longer to repay your debts, but it will help you improve your situation little by little.

If you think filing bankruptcy is the best option for you, the team at Zebley, Mehalov & White, P.C. will help. Serving residents in Pennsylvania’s Fayette, Washington, Greene, and Westmoreland counties, these professionals will help you choose the best debt relief options for your situation. They have been handling bankruptcies since 2001, and their legal team will provide you with the personal service you need. To schedule a consultation, call (724) 399-9200 or visit them online to browse their practice areas.