Is Bankruptcy Right For Me?

Filing for bankruptcy may have serious repercussions on your ability to obtain credit or employment for years.  Typically, a bankruptcy will appear on your credit report for ten years. 

There are alternatives to filing for bankruptcy.  Before declaring bankruptcy, it is wise to consult with a lawyer.  Alternatively, the credit counseling requirement in the new bankruptcy law may open up new options for you to consider.

The means test that is part of the new bankruptcy law will determine whether you are eligible to file Chapter 7 or Chapter 13 bankruptcy.  Generally speaking, people who have no steady stream of income, cannot keep up with a strict payment plan, and have property that is exempt from liquidation would file for a Chapter 7 personal bankruptcy.  Debtors having a steady stream of income that would enable them to pay off their debts, and who own real estate, cars and other personal property that is not exempt from liquidation, would file for a Chapter 13 bankruptcy.

Deciding whether you will file under Chapter 7 or Chapter 13 will depend upon the means test.  Before filing for bankruptcy, make sure that you and your attorney and/or credit counselor have concluded that it is the only reasonable option for your situation.

Next:  Approved Credit Counselors; Means Test Data:  Median Wages for Your State