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Knowing When Bankruptcy Is the Right Choice

In our culture, bankruptcy is often thought of as a four-letter word. However, it’s sometimes the smartest choice for a person or a couple who is overloaded by debt that they can’t pay back. Here’s how to know when filing for bankruptcy is the right choice for you.

Are you being hounded by creditors? – Filing for bankruptcy immediately stops creditors and collection agencies from calling you and trying to collect payment. As long as you stay on par with the terms of your bankruptcy, they are forbidden from contacting you.

Is your credit score already in the red? – It’s true that nothing lowers your credit score faster or more than bankruptcy. However, if your credit score is already very low (which it probably is if you’re thinking about bankruptcy), then it can’t get much lower. Plus, once you start the process, any good credit you build up has a more significant effect. Most people’s scores are higher a year after declaring bankruptcy than they were before filing.


Are your debts insurmountable? – Sometimes, life just hits you with one right hook after another. Perhaps you took out some personal loans to get through grad school. Then, you got sick while your insurance lapsed between jobs. The medical bills piled up and you had to live on credit cards while you got back on your feet. Rent and utilities got pushed to the back burner and all of a sudden you had more debt than you ever would’ve thought possible.

Do you want to pay back some of what you owe without the exorbitant interest rates?– Filing for bankruptcy doesn’t mean that you’re trying to run away from your responsibilities. If you file a Chapter 7, you have to liquidate your assets in place of paying back most of your debt. You can think of that as another way to pay back what you owe. Alternatively, Chapter 13 allows you to keep your assets and agree to pay back a portion of your debt over the next three or five years. You can think of this as paying back the principal amounts on your loans or credit cards without having to struggle with the interest rates that have kept you drowning year after year.

Remember that some debts, such as student loans, child support, and tax debt, don’t qualify to be forgiven with bankruptcy. So, those will always have to be paid back. However, filing either a Chapter 7 or a Chapter 13 can give you the financial freedom to pay back these things quickly and more easily, too.

Final Thoughts

If you’ve determined that bankruptcy is the best way to get out from under your mountain of debt and move toward a brighter financial future, then your first step is to choose the right bankruptcy law firm to help you with the process. You’ll want a firm that will give you a fair, affordable price as well as one that will treat you with compassion and respect. You’ll find both those and more with Fair Fee Legal Services.

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