your options for getting out from under debt

Is It Time to Make the Big Bankruptcy Move?

A lot of people are experiencing money troubles right now and some have been struggling for some time. Like many, some have wondered if it was time to declare bankruptcy. Most feel obligated to pay their debts but it can be difficult to know when enough is enough. To help you know whether or not it's time to make the big bankruptcy decision, read on for some factors to consider.

1. Bankruptcy, be it chapter 7 or chapter 13, has no minimum debt limit. What might seem like a manageable debt load to one person could be creating chaos with another person. Each person has to make the decision based on their own personal situation and outlook.

2. It's important to know how much debt you have before you decide on bankruptcy. Most people that get behind on their debts don't add up the totals until they fill out their bankruptcy paperwork. Rather than taking that route, add up your credit card, medical debt, mortgage, auto loans, personal loans, and other debts. Then, add up your minimum monthly payments required to pay that debt.

3. Filing chapter 7 bankruptcy will require you to list your assets based on the value of an item. For example, your home may be valued at an appraised price minus your mortgage balance. The value of your assets plays a large part in bankruptcy. By the way, the lower the value of your assets, the better off you are for bankruptcy purposes. Your asset list should contain your home, vehicles, bank accounts, investment accounts, and other valuable items.

4. Subtract your debts from the value of your assets. That is your net worth. Now, consider how long it will take to pay off your debts if you continue to make the minimum payments. You can call your creditors for this information if necessary.

5. By this time, you are probably left with some numbers that are far from positive. Many people are unable to pay off their debts for years and years. In addition, the minimum payments each month are crippling enough to cause some to be unable to pay for food and shelter.

6. Beyond the numbers, consider the stress many debtors are under from debt collection actions. Not only do creditors call, text, email, and send letters repeatedly, but things can get even worse. You could end up losing your home and your car, have your wages garnished, and be sued in court.

The above factors should get you started. For more information about bankruptcy, speak with a bankruptcy attorney.