After months of struggling to get your finances back in order, you come to realize that they may be beyond your means. You already live paycheck to paycheck and cut out anything you considered a luxury just to keep a roof over your head.
Regardless of what financial calamity led you to this point, you now have a choice to make. Creditors call you incessantly for payment, your credit score is dropping daily, and you just need some relief. You think that bankruptcy might be your most viable option, but you still aren't sure.
Questions to consider when deciding to file bankruptcy
It may help to consider the following questions to determine whether this option will give you the debt relief you need:
- Have you exhausted other options? Many people ask themselves this question because they are under the mistaken impression that bankruptcy is a last resort. That isn't necessarily the case.
- Should you file Chapter 7 or Chapter 13? In some instances, you may choose which chapter to file, but more than likely, the means test will make that determination.
- Do you have debts that you can't discharge? Not all debts are eligible for discharge.
- What happens to my house and car? If you want to retain as much of your property as possible, the type of bankruptcy you file makes a difference.
- What about my retirement plan? You decided not to use your retirement to pay off your bills since you would incur significant tax penalties. In most cases, your retirement account remains yours.
The answers to these questions may help you make your decision.
Answering these questions may require help
As you can see, none of the above questions has an absolute answer. That is because every situation is unique, and several factors could affect how you answer these questions for yourself. You may need the help of someone experienced in bankruptcy to make your final decision. There could be factors that you failed to consider or other steps to take prior to filing in order to get the most out of the process.
Moreover, filing bankruptcy is complex and requires you to meet numerous deadlines and requirements. Missing any of them could jeopardize your chances at a fresh financial start. You may want to consider taking advantage of the legal resources in your area of California.