Before you go to the trouble and expense of beginning the proceedings, appraise your situation and determine if you have anything to gain from filing bankruptcy. Gather your debt worksheets and your budget, then ask yourself the following questions and think about what your answers may mean when you're considering bankruptcy. Be precise and realistic, because the trustee and court officials will be.
- Do you have any discretionary income left after you make the minimum payments on all bills and cover all essential expenses?
If your answer is yes, forget bankruptcy. More than likely, your application will be dismissed.
If your answer is no, go on to the next question.
- Would a trustee be likely to view any items in your budget as nonessential?
If your answer is yes, you have two options: Eliminate the item yourself and put the money toward your bills, or, if the item is important to you, avoid bankruptcy so that you can retain your option of spending that money.
If your answer is no, go on to the next question.
- Are you behind on payments of secured debts, such as mortgage and car payments?
If your answer is yes, contact the creditors and try to make arrangements to catch up on payments.
If your answer is no, continue to pay your bills and budget carefully; you're probably a good candidate for bankruptcy.
- Do you have property that you could sell ( that is, without liens or other impediments that would probably be taken from you if you filed for bankruptcy?
If your answer is yes, you may want to sell it yourself, apply the money toward your bills, and keep your credit record clean.
If your answer is no - that is, either you have no property that could be taken away or there are liens on the property, so it couldn't be sold - bankruptcy may be an option.
- Did a friend or relative co-sign any of the loans that the bankruptcy would affect?
If your answer is yes, talk to that individual to find out if he or she is able to repay, because the debt will become that person's if you file for bankruptcy. If your friend or relative can repay, perhaps he or she can do so without having you file, and then you can repay that individual in time.
If your answer is no, continue looking into bankruptcy if you feel that it's necessary.
Pretty much all the other considerations are personal or emotional. Are you comfortable with having officials establish your budget? Are you comfortable with the though of having this mark against your credit history for years and being unable to get loans, credit cards, and so on? Do you lack the discipline to carry out a repayment plan without the threat of legal intervention? Are you willing to give up much of your property to creditors? Will you be able to recover emotionally from the process? Indeed, the bankruptcy process is about as much fun as a root canal.
