How Do You Know If You Should File For Chapter 7 Bankruptcy?

Making the decision about whether to file for Chapter 7 bankruptcy is not always completely clear, and that is why many people turn to a lawyer for help with this decision. While there are times when you might not know if this is the best option, there are several different factors you should evaluate that may help you determine if this is really the best way for you to get out of debt, and here are some of them.

The attempts you have made already to become debt-free

One way to feel good about your decision to file for Chapter 7 is knowing you have tried everything you can possibly think of or find as an attempt to get rid of your debts. For example, have you gone through a credit counseling or debt settlement program? If so, it may not have offered you the relief you really need, but knowing you tried other options may help you feel better about pursuing bankruptcy, as many people view bankruptcy as a last resort.

The assets you own and the equity you have in them

Secondly, it is very important for you to carefully review the assets you currently own, including the equity you have in each. The main tradeoff of receiving a discharge of debts in Chapter 7 is surrendering things you own to the court. The good news is that you would not have to surrender assets you have if you do not have any or if there is very little equity in them. You should evaluate the equity you have in your home, your cars, and your bank accounts to see what you stand to lose by filing for bankruptcy. If you have very little equity, you really have nothing to lose by choosing Chapter 7.

The types of debts you currently have that you cannot pay

The other important factor to evaluate is the types of debts you have that you would like to eliminate. There are many types of debts that will qualify for debt-forgiveness if you file for Chapter 7, but there are also many types of debts that would not qualify in a Chapter 7 plan.

These are three of the best factors to evaluate and consider as you try to decide if Chapter 7 is right for you. Another good step to take is meeting with a bankruptcy attorney for an evaluation of your financial situation.