Personal Bankruptcy Questions

If you find yourself overwhelmed with credit card debt (or any other kind of debts for that matter), I know it can be incredibly stressful. It can be difficult to keep a level head and think things through clearly, but you have to do your best to do so anyway. Making the wrong decision can leave you with unwanted consequences for the long-term, so you should take some things into account before making a decision. Before declare bankruptcy, for example, you need to consider whether it’s right for you.

Here are three questions you should ask yourself before filing for bankruptcy.

1. Are you really unable to pay off your debts?

While bankruptcy is a legitimate way to help yourself if you truly are unable to improve your financial situation on your own, it’s not for everyone. There’s a good possibility that you won’t even need it. One important question is whether you could pay off your debts within a few years if you were reasonably strict with your budgeting and spending.

If you go through the math and think that you can pay your bills off slowly over time, then bankruptcy may simply not be necessary in your situation.

2. Have you considered all the alternatives?

There may be other ways to pay off your debts, even if they require some sacrifice. Can you find a part time job and use the extra income to pay off your bills more quickly? What about selling some of your assets?

Yes, I know, if you’re on the verge of bankruptcy you probably don’t have very many valuable assets to sell in the first place. However, many people actually are able to sell some assets or find other ways to modestly increase their income and avoid bankruptcy.

If credit card debt is your main concern, you may be able to transfer your balances to a card with a lower interest rate. This is not a magic bullet, and you still need to develop discipline with regards to spending. However, a lower interest rate, even a temporary one, can help reduce some of your long-term debt load.

3. Are you willing to face the negative consequences of declaring bankruptcy?

It’s certainly not the end of the world or the end of your life, but bankruptcy does have significant long-term effects. Your credit score will be impacted, and bankruptcy will stay on your record for about 10 years. You may have to pay higher interest rates for credit, and you may have more difficulty getting credit or any loans at all.

However, in time you’ll be able to rebuild your credit if you’re patient. Some companies even target those who have just gone through bankruptcy because they know there is a clean slate. If you find yourself with one of these offers, be careful. Don’t be enticed by a credit offer which might bring you under a financial burden once again. If you take bankruptcy as a financial rebirth, you can start on a right track to success.

Click here for more information on bankruptcy declaration.