If you are dealing with financial troubles and struggling to keep up with overwhelming debt, bankruptcy may seem like an appealing option to you. After all, bankruptcy can allow you to get rid of most or all of your debt, and protect you from foreclosure or eviction from your home. However, bankruptcy is not something to be undertaken lightly, and it can be more beneficial for some than others.
Five things you should consider before declaring bankruptcy:
- How much debt do you have relative to your income?
- It is important to have a realistic idea of how much income you make, and whether it is realistic to be able to pay back your current debts with your expected income. Not only might this have an impact on what kind of bankruptcy might work best for you, but it could also affect whether you qualify for certain kinds of bankruptcy at all. Thus, you should know how big your debts are relative to your income, as it could substantially impact your bankruptcy strategy.
- What kind of debts are you liable for?
- While many people struggle with overwhelming debt, not every kind of debt can be discharged through the bankruptcy process. Unfortunately, child support obligations, college loans, and certain kinds of tax obligations are not affected by bankruptcy. If these are the major economic problems affecting you, bankruptcy’s benefits might be minimal in your case.
- Would reorganizing your business help you?
- If you are a business owner, you may be able to seek Chapter 11 bankruptcy, which is also known as a reorganization bankruptcy. In this form of bankruptcy, you submit a plan to the court that discusses how you will reorganize your business to make it more profitable, which you put together with help from a bankruptcy attorney. If this path is viable for you, you could get your business back on a good footing without needing to liquidate your assets to pay off your bills.
- How bad is your credit?
- Unsurprisingly, people and businesses that take on a large amount of debt and have trouble paying it back tend to have a lot of trouble with their credit. This affects their ability to get loans and other forms of financing, substantially impacting their options for improving their economic future. While bankruptcy can negatively impact your credit, the debt you can eliminate through the bankruptcy process may actually result in you improving your credit once all is said and done.
- Can you pay back your debts without liquidating your assets?
- Not every person who goes into bankruptcy needs to go through a Chapter 7 bankruptcy, which is known as a liquidation bankruptcy. That is the process where your non-exempt assets are sold off to pay back your debts as much as possible. With other options like Chapter 11 bankruptcy available, you may be able to continue forward and get a fresh start on your financial future without needing to get rid of nearly everything you own.
If you are a Floridian business owner wondering if bankruptcy is truly in your best interests, you should consult a Florida bankruptcy attorney to help you figure out what works best for you. Please contact the law offices of David Langley at (954) 356-0450 for a consultation about whether bankruptcy may be the right way to address your financial circumstances. The sooner you consult with a bankruptcy attorney, the more quickly you can get on a path towards repairing your finances.