When should I file for bankruptcy?
The decision to file for bankruptcy is often one of the hardest choices that a person has to make in his or her lifetime. Poor planning can often make the process even harder. It goes without saying that filing for bankruptcy should be a last resort, and should only be done when all other methods of satisfying one’s financial obligations have been exhausted. However, if your situation has become so severe that you are in danger of foreclosure, garnished wages or repossessions or are facing debts that you are in no position to pay, putting off the inevitable can have devastating consequences. Procrastination can cost you your car, your wages, and even your home. Filing your case in a timely fashion can spare you these losses.
How will the new bankruptcy laws affect me?
The Bankruptcy Abuse Protection and Consumer Protection Act, passed in 2005 puts much stricter guidelines on personal bankruptcy filings. Some of these guidelines include mandatory debt counseling, income limitations on who can and cannot file, and requiring some debtors in higher income brackets to pay off a portion of their debt before allowing them to file. Depending on the amount of money you have, your current income and your personal circumstances, you may not be allowed to file for Chapter 7, which absolves most of your debts. Instead, you may be forced to file for Chapter 13, which requires you to enter into a payment plan. Before filing, it is important that you speak with someone experienced with the bankruptcy laws so that you will have a better idea of what to expect when you file.