When and Why Should You File For Bankruptcy?

Filing for bankruptcy provides a legal way to get out of debt. It may come with other costs, such as payment to bankruptcy lawyers and loss of property in case of Chapter 7 bankruptcy. For these reasons it should be used only as a last resort when you can't manage your debts.

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Thankfully, it gives you a chance to start over. Deciding when to file for bankruptcy can be challenging without the proper knowledge. This is why most people get it wrong. In this video, you will learn more about bankruptcy.

You should file for bankruptcy after examining all your options with a credit counselor. They will advise you if filing for bankruptcy is your best solution under the prevailing circumstances. In most cases, it will be your best option when your income cannot manage to pay your debts. This is often indicated by a poor credit score, meaning you are only accumulating more debt and stress from creditors without being able to pay it back.

You should also consider filing for bankruptcy if your income can only pay your bills without leaving room for any savings for at least three to five years. If you have property, it should not automatically prevent you from filing for bankruptcy. Oftentimes, you will still be able to file successfully and give yourself some breathing room. While bankruptcy may seem scary, it can be the best option under certain circumstances.