No one ever goes into their adult lives thinking that they will one day have to file for bankruptcy. Yet many people end up having to make this decision. In certain cases, it could be because they lived beyond their means for too long. Other people are put in a situation where their debt outweighs their income because of a change in their work standing. There are a million reasons why bankruptcy might come into play, and many of them can be blamed on nothing more than individual bad luck.
The psychological impact of bankruptcy can be extremely serious. People think of it as a failure or an admission of defeat in their lives. For that reason, many avoid even considering bankruptcy for far too long, even when the reality is that it might be their best option to solve their financial problems. Depending on what type of bankruptcy suits your needs, it can bring down debt and provide you a way out of the hole in which you find yourself.
“Bankruptcy is not them cheating their way out of their financial obligations and scurrying out of their debt,” he says. “It is a legal process which offers people the opportunity to help themselves. What they do with that help is ultimately up to them, but most people come out the other side of bankruptcy in much sturdier financial standing and often with a new lease on life.” says Brad J. Sadek, Esquire, managing partner of Sadek & Cooper which specializes in personal bankruptcy cases in Philadelphia and New Jersey.”
Knowing When It’s Time
Perhaps the hardest part about bankruptcy is deciding when it’s a good option for you, which is why seeking out professional legal expertise is always a good first step. Just because you’re having a hard time paying bills in a specific month doesn’t mean you should be thinking immediately about filing. But waiting too long can also be problematic. If you’ve reached the point where collection agencies are lining up and you find yourself trying to go without basic human necessities like heat or food, it’s probably time to think about bankruptcy as an option. The next step is finding the option that’s right for you.
Seven versus Thirteen
There are two main types of personal bankruptcy alternatives available to people who are struggling financially. Chapter Seven is generally reserved for the more severe cases, where people have minimal extra income and are dealing with severe debts of both the secure and unsecured variety. If you qualify for Chapter Seven, there’s a good chance that some of the unsecured debt could be reduced, but non-exempt property, which basically boils down to anything that isn’t an absolute necessity in your daily life, will be sold to pay off the debt.
Chapter Thirteen bankruptcies is a little less stringent in terms of what is required of you. With Chapter Thirteen, which is generally for people who have heavy debt but have a somewhat steady income stream to pay it down over time, property usually isn’t touched. But you will have to subject yourself to a strict repayment plan to take care of your debts over a period of several years. You also have to qualify for such a bankruptcy plan based on your financial situation; it’s not as if anyone can voluntarily undertake this process.
Making the Final Decision
Deciding whether or not to file for bankruptcy is, without a doubt, one of the most difficult choices that an individual could possibly have to make in a lifetime. On the one hand, it can be a last resort and a lifeline for someone who is underwater financially and wants a chance to a fresh start. Yet bankruptcy is no walk in the park; it requires a great sacrifice of those who choose it. The best choice you can make is to talk it over with family and friends and, most importantly, seek the advice of a legal professional that specializes in this field. And try your best to be guided by the reality of the situation, not by any stigma or bad association that you feel is attached to this proven financial remedy.