Filing Bankruptcy: How Do I Know When To File?


Filing bankruptcy is a can be scary endeavor. The negative connotations surrounding a bankruptcy filing are enough to deter anyone from the process. Often times, individuals are not sure when or if bankruptcy is in their best interest. In today’s article, our experts at provide insightful tips on when to file, as well as how to file bankruptcy.

Firstly, you can ask yourself a few questions to assess your current financial circumstances:

  • Are you receiving calls from creditors or debt collectors?
  • Are you only making minimum payments on your credit cards?
  • Do you feel overwhelmed when you think about your finances?
  • Are you thinking about debt consolidation?
  • Do you have to use credit cards to pay for necessities?
  • Are you not sure of exactly how much of debt you owe?

Evaluating your situation

You ought to give your financial situation a little more thought if you answered yes to at least two of the above questions. To determine whether you are indeed bankrupt, calculate your expenses and your income. If you are earning less than what you can afford to pay, then bankruptcy may be an option for you.

How Do I Declare Bankruptcy?

Declaring bankruptcy can be done in two ways: A common route is a voluntary bankruptcy filing. The second way is when creditors request the court to order a bankruptcy.

There are several ways in which you can file bankruptcy – the most common being a Chapter 7 or a Chapter 13. It is recommended to speak to an experienced bankruptcy attorney to determine which Chapter is best suited for your situation.

Filing Bankruptcy: Chapter 7

A Chapter 7 bankruptcy is suited for low-income earners with a large amount of unsecured debt. It is often referred to as liquidation because the Trustee will sell off your assets to pay of debt. However, in the vast majority of cases, the Trustee finds that there are no assets to administer and makes a judgment. After about four months, you will receive a notice of discharge removing your legal obligation to pay back debt to any creditors listed on your bankruptcy petition. It is important to note that not everyone can qualify for a Chapter 7 bankruptcy. To find out more about Chapter 7 eligibility, please click here.

Filing Bankruptcy: Chapter 13

For those debtors who own valuable property, a filing bankruptcy under a Chapter 13 may be the better choice because it will give them an opportunity to payback debt over time and not risk foreclosure or repossession. Debts are usually paid back over a three to fiver year period, after which debt may be discharged.

Once your Chapter 13 bankruptcy is approved, the Automatic Stay goes into effect prohibiting creditors from engaging in any debt collection activity. Just like a Chapter 7 bankruptcy, filing bankruptcy under a Chapter 13 has certain eligibility requirements. To find out more, please click here.

To find out more about whether you should file a Chapter 7 or a Chapter 13 bankruptcy, please click here.

The Way

It is important to keep in mind that each person’s financial situation is different. By scheduling a free consultation with one of our experienced bankruptcy attorneys you will receive a comprehensive analysis of your situation. We will help you determine whether to file a Chapter 7 or a Chapter 13, as well as walk you through the entire process. With our affordable payment options, you will on your path to financial freedom in no time. Here’s the best part: Our advanced technology allows us to file your case online – you never have to make endless trips to your bankruptcy lawyer’s office!