When Should One File For Bankruptcy?

Overview

If you can’t pay your bills, have credit card debt, struggle with your car payments you need to do something.  Meeting with a bankruptcy trustee is a start and may involve filing for bankruptcy. Basically you should file for bankruptcy when you’re trying to get yourself out from underneath your debt load and still can get on with your life. 

When you’re reviewing your options and you’re having assets that you can’t keep up payments with. For instance your home, like if an asset like a house or car has value above the loan amount. It’s deemed to have equity that will need to be paid to your creditors to keep the asset. Or face losing your home or car. Filing a bankruptcy is a legal process that helps you get out of debt and create healthy financial habits that will last far beyond the bankruptcy process. 

Also consider filing for bankruptcy when you’re deep in credit card debt. For one you won’t be able to keep a credit card during bankruptcy. This is because bankruptcy law requires all filers to turn over their credit cards to the trustee, at the time of filing. Because keeping a credit card defeats the purpose of the bankruptcy and provides an opportunity to take on additional consumer debt while trying to eliminate old debts. 

Filing for bankruptcy will also help you eliminate the bad credit that you currently might have. Just as if you had to do a credit score check, and look to see what your creditors think about you. It’s not going to be good. And filing for bankruptcy will eventually with time help get your credit score on track again. As contrary to popular belief, filing for bankruptcy is the first step to rebuilding your credit. As first you have to erase your debts.