How to Determine Eligibility to File for Bankruptcy
Filing for bankruptcy is a big decision and one that will certainly impact the rest of your life. Deciding whether to apply is one of the hardest things you will ever have to do, and you should always fight tooth and nail against it. Still, unfortunately, many have to declare bankruptcy, and even if you don’t want to, a debtor can suggest it to the court without your approval if you have failed to honor your debt repayments. A bankruptcy period usually lasts for at least a year, and at the end of this, you will likely not have to pay back your debts, unless they are for court fines or student loans.
Determining whether to file for bankruptcy is not something you should take lightly, and you should give it serious consideration. Here is how you can determine whether or not you should file for bankruptcy.
Always Seek Advice
When you are considering declaring bankruptcy, you should make sure you receive adequate and professional advice. You should always remember that help is available, and by not seeking it, you risk causing damage to you and your family’s quality of life. In some cases, bankruptcy can be avoided, and this is why you need a professional advisor to be able to run you through the situation and see if there are any solutions that will not have a detrimental impact on your credit score and your financial future. And, while bankruptcy can give you a second chance after the first year is over, it still is not for everybody. You absolutely need to make sure you have done your research before filling out the bankruptcy form, and you must remember, filing for bankruptcy is not free. You will have to pay an upfront cost.
Am I Eligible for Bankruptcy?
Bankruptcy is a great way to help you free yourself from the shackles of your debt, however, it may not be the best option for you. You may be eligible for bankruptcy if you are overwhelmed with debt and can, unfortunately, not see a light at the end of the tunnel; if you have hardly any belongings that could be considered valuable, no house, and your car is not very expensive, and that you see no way out in the foreseeable future, with things only predicted to deteriorate even further than they already have.
There is not a minimum amount of debt one must have to be in for you to become eligible for bankruptcy, and if your debt far surpasses everything you own in cost, then bankruptcy is certainly something you must consider, and may, unfortunately, be the only way out.
When Am I Not Eligible for Bankruptcy?
Bankruptcy may not be a good option, or you may not be eligible for it if you meet any of the following criteria: if you do not want your debt problems to be made public for everybody to see; if you foresee your circumstances changing positively in the future, like if you are going to receive a substantial pay-off, inheritance, or are selling your home, in that case, it may be better if you spend the money on your debts rather than declaring bankruptcy, or if your pension fund is significantly more than the debt you are in, as you can take money from that to pay back your debts. You may also not be eligible or may wish to think twice if you work as an attorney, real estate agent, or in accountancy, as it is not common for professional associations like these to bar members from being bankrupt, and you may be made unemployed if you declare bankruptcy.
If you have decided your financial situation warrants filing for bankruptcy, then you should hasten to apply. You will have to pay the preliminary fee, and if you cannot, you will be expected to make monthly installments.
You should withdraw money from your bank account to ensure you will be able to financially support yourself and your family for the period where your bankruptcy is being processed, as your accounts will be frozen and your properties seized, meaning you will not be able to touch any of your money or sell anything.
Only take out enough for you to live, as your finances will come under extreme scrutiny and you may get into trouble for taking out big chunks of money. Your application will likely be processed within a few weeks, and you will be expected to attend a bankruptcy hearing.
Bankruptcy is not a joke, and you should make sure you do your best to ensure you can avoid it. Bankruptcy can affect the rest of your life, and it can cause untold damage to your personal life and your family. While sometimes it can be a necessary evil, you should do your best to stay away from it.