When Does Bankruptcy Become A Good Move?

Bankruptcy is a scary thought and luckily a fairly uncommon one, but it’s a reality for many, so sourcing the right information about it can put your mind at ease about an already stressful situation. The media are often found badmouthing the process and tell us tales of large corporate companies going bankrupt overnight and whichever celebrity is having financial troubles this month, and it can put fear into the minds of the public. But it shouldn’t always be something that is feared, sometimes filing for bankruptcy is a good way to hit the reset button and get yourself back on track. 

When Should I Declare Bankruptcy?

First things first, we should assess our situation and evaluate if we should declare ourselves bankrupt. We can do this in a number of ways and being honest about our situation is the first step to getting you started. If you’re feeling anxious about getting your finances in order and it’s making you feel out of control then it might be a sign you should start researching what to do when declaring yourself bankrupt. Being unable to make the minimum payment to your credit card each month or even using your card to buy necessities is another sign you might be struggling with your finances. Finally, if you don’t know how much you owe and are considering consolidating all of your debt then it’s time to take action into your own hands before debt collectors start sending letters. If you’re in the Las Vegas area and need help, consider hiring an experienced las vegas bankruptcy lawyer.

If more than a few of these issues are affecting you then it might be worth looking into what is needed to declare yourself bankrupt. During the process, there are lots of things to consider so taking a look at the different steps involved and being able to understand them will put your mind at ease and help you with completing the process. Getting help from a professional will also help you ensure that every step of the way is being completed correctly making it an easy transition back to normal life. 

Why is it a Good Move?

Being able to declare yourself bankrupt doesn’t sound like a good thing to do and often comes with its stigmas, but that’s not to say it can’t be hugely beneficial. Anyone going through financial issues will know that it’s a huge strain on relationships and your own mental health, one of the biggest reasons for divorce is monetary problems, so being able to sort problems with as little stress as possible is beneficial to everyone involved. 

Being able to start again is a lifeline many of us wish we had, that’s not to say driving yourself to bankruptcy is how everyone should go about hitting the reset button, but for those in the situation already then it can be life-saving. 

Types of Bankruptcy

There are two types of bankruptcy and you should listen to all options that are given to you before you make a decision on what you’re going to do, there might be a way not to declare yourself so research every avenue first. 

Chapter 7 bankruptcy is where almost all of your assets and property are liquidated and become the property of the bankruptcy estate which is then sold to pay off your creditors to repay your debts, there are some exceptions to this but the general rule is everything will be sold. 

Chapter 13 bankruptcy is designed so you can keep all of your property and is a good option for people who want to keep their family home, it is, however, determined by the property itself. In this case, to avoid repossession, payments for things such as your mortgage and car loans will have to be kept up on time. 

Impact to Credit Score

Most of the time when people are thinking about filing for bankruptcy they already have an affected credit score due to late payments, so if that’s the case then it’s a little late to worry about your credit score. Filing for chapter 7 or chapter 13 will drop your score by an average of 100 points and will affect the way you apply for loans or any credit in the future. It’s worth remembering that it can all change and you can rebuild your credit score from the ground up, we’ve done it once so we can do it again. 

Whilst bankruptcy is a scary thought, it can also be a good one and it’s worth looking into every avenue before doing so. Keeping your family together or keeping your loved one close is far more important than money, and that’s when bankruptcy becomes a good thing. Follow the steps involved with the process as closely as you can and listen to all advice that’s given, it’s a stressful time but you’ll come out the other side feeling a whole lot better about your situation.