Before jumping into any financial decision, it is always a good idea to consider all of your options and make sure it is the best for you or your family. The same is true of bankruptcy. While it can be extremely beneficial for many people, it is not always the perfect solution for everyone. Below we have listed some of the various questions to ask yourself before filing for bankruptcy.

How do you know if you qualify for bankruptcy?

There are two main types of bankruptcy: Chapter 7 and Chapter 13. In order to file for Chapter 7, you must pass the means test, which will calculate how much you make compared to your debts and expenses. Chapter 13 bankruptcy is a good option for those who do not qualify for Chapter 7; however, your debts must be under a certain amount in order to file. Always speak with a bankruptcy lawyer about your options before moving forward.

Is it going to be beneficial for you to file?

It is important that you look at what your end goal is with bankruptcy. Realize that while it will discharge a good amount of your debt, depending on the chapter you file under, it will not get rid of all your debts. Student loans, child support and alimony payments, taxes or court ordered restitution/fines for the most part cannot be dismissed. Additionally, some creditors are willing to negotiate a debt settlement which may make it so that you do not even have to file. There are numerous options available including debt negotiation, debt consolidation and debt counseling that may be better for your unique situation.

Are you facing foreclosure or repossession of your property?

Certain debts that are secured such as your mortgage or car loans can be tricky if you default on your payments. The lender can foreclose on your home or repossess your property, and while you cannot remove the lien a lender has on your property with bankruptcy, it can set up an automatic stay. This will at least delay the process and allow you to set up payment arrangements and catch up on your debts.

What is the value of your property?

Knowing how much property you have and how much it is worth is critical before filing for bankruptcy. While there are certain exemptions that can allow you to keep certain items, under Chapter 7 bankruptcy, bankruptcy trustees can take your assets and sell them to help repay your creditors. In Chapter 13, while you are allowed to keep all of your property, you will most likely still have to pay unsecured creditors a sum of money that is nearly equal to the total value of your nonexempt assets. Filing for bankruptcy could be detrimental to your overall financial situation, depending on the value of all your assets and property.


The best thing that you can do before stepping forward with any form of debt relief is to meet with a bankruptcy attorney to talk over your personal case. Every person's financial situation is completely different, so at the David McCormick Law Group we do not take a cookie cutter approach to our clients' needs. We realize that bankruptcy is more than just number; our clients' lives and future well-being depend on the success of the bankruptcy proceeding in many cases.

With that in mind, we work personally with each person to come up with an option that best suits their needs. Since 1996, we have assisted over 17,000 clients with bankruptcy and we are prepared to do the same for you. Contact our office today to receive your free initial consultation! Se habla espanol.

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