3 Questions To Ask Before Filing for Bankruptcy

Photo of author

(Newswire.net — December 29, 2023) — Did you know there were 387,721 bankruptcy filings in the U.S. in 2022

And for the hundreds of thousands of people who go that route annually, there are often more struggling financially and wondering which way to turn.

Filing for bankruptcy can be a traumatic experience. But it’s the right option sometimes — especially if the alternatives won’t do. Before deciding if that option is best, you must consider certain things. You’ll want to know you’re making the right move for your situation.

Individuals can file a Chapter 7 or Chapter 13 bankruptcy. One primary difference between the two types is that Chapter 7 allows people to wipe out their unsecured debt after a specified period. Meanwhile, Chapter 13 allows individuals to reorganize their debts while paying back some of the money they owe. It makes sense to consult a lawyer if you have questions.

Keep reading to see three questions to ask yourself before deciding if bankruptcy is the answer.

1. How Much Debt Do I Have?

One of the first things to do is consider how much debt you have — all of it. So, you’ll want to calculate personal debt, credit card debt, and any other debt on your proverbial ledger. Doing so will help you get a feel for whether you can manage your debt problem or if bankruptcy is the only viable option.

Consider meeting with a bankruptcy lawyer if bankruptcy looks like the go-to strategy. You’ll be able to ask questions, get answers, and decide whether or not bankruptcy is right for you.

“If you’re so deep in debt that a bankruptcy filing seems like a likely outcome, contacting a bankruptcy lawyer is a good idea,” says Brian Walker, a lawyer at Brian Walker Law Firm. “Financial difficulties can stress out anyone, so finding the right legal representation can help you make sense of a difficult bankruptcy process. A bankruptcy lawyer will help you and ensure you have the information you need to make informed decisions.”

2. What Assets Do I Have?

It’s also vital to calculate your assets and figure out the value of your assets. Doing so will be helpful if you decide to sell assets to pay off debt. Consider, as well, that knowing what your assets are worth could come in handy should you wish to remortgage your home to reduce debt. Borrowing financial resources against your assets could work in your favor.

3. Are There Better Alternatives Available?

Before filing for bankruptcy, you should determine if other options are available. That’s one reason it makes sense to consult a bankruptcy lawyer. A lawyer will ask you questions and give you advice you hadn’t thought of, which will help you going forward. 

For instance, it might make more sense to remortgage your home, consolidate your debt, sell off assets to slash your debt, or do other things. Don’t take any viable alternatives off the table until you’ve considered them and assessed whether they’re worth pursuing.

You’ll want to be sure a bankruptcy filing is the best option for your debt situation. Your lawyer will also explain the pros and cons of Chapter 7 and Chapter 13 bankruptcy so you can choose.

While the thought of filing for bankruptcy can initially be distressing, finding a reputable bankruptcy lawyer will help to make the process less stressful. A good lawyer will explain the process so you know what to expect and won’t be surprised. You’ll want all the cards on the table. That’ll ensure you can make decisions based on facts rather than emotions. A lawyer can help you navigate the complex bankruptcy process and achieve a desirable outcome.