3 Surprising Reasons You May Not Want to File For Bankruptcy
For many people who are drowning in debt and can’t find another way out, filing for personal bankruptcy is often the best option. It can help you start over with a clean slate and get your life back. If you decide to do so, you certainly won’t be alone. In fact, about 1.5 million people file for bankruptcy every year. But in certain cases, you may want to consider other options at your disposal.
Although filing for personal bankruptcy might seem like the easy way out, it’s actually a big decision that will have a significant impact on your life going forward. It may not solve your problems and even do more harm than good, depending on the situation. If you’re wondering whether you should file based on your circumstances, it’s in your best interest to enlist the help of a bankruptcy lawyer. He or she can advise you on the best course of action that will allow you to get your life back on track. But before you consult with an attorney, you may want to consider these three reasons not to file for personal bankruptcy.
You might want to entertain other options if…
- You’re able to pay off your debts
If the debts you owe are relatively small in comparison to your income, you may actually be better off making the arrangements to pay off the debts yourself. Of course, if you’re unemployed or have a limited income, this probably won’t be an option for you. But if you’re gainfully employed and could potentially eliminate the debt yourself, you may want to hold off with your filing for now. To determine whether this might be feasible for you, you’ll need to calculate your monthly income and deduct all monthly expenses, including credit card payments. If you’re left with a significant amount of money, you could potentially benefit from handling your debts yourself without an official filing. This is a rare occurrence, but it’s something to take under consideration.
- The majority of your debts are tax-related or from student loans
There’s a general misconception that filing for personal bankruptcy will eliminate all of your debts. This simply isn’t true. In the eyes of the law, not all debts are created equally, and not all of them will be wiped out by a filing. In particular, recent tax debts and student loan debts will not be eliminated. While payroll taxes will never be wiped out, income tax debts can be eliminated only if they meet certain criteria. These debts have to be at least three years old to be considered for elimination. Student loan debt is even harder to get rid of. The bar is set very high and it’s extremely rare that student loan debt is forgiven. If the main cause of your debt can be attributed to either of these, a bankruptcy lawsuit simply won’t help you.
- You have assets you can’t risk losing
If you file for Chapter 7 bankruptcy, you’ll risk losing your assets. This is generally not a problem for those who don’t own property or other valuable holdings, but if you hold the deed to a priceless family heirloom or have inherited property, the risk may be too great. If your assets are not protected, a trustee could potentially seize them, sell them, and distribute the money to your creditors. Although many people who file don’t end up losing their assets, some don’t even want to take the chance. Your fears may be unfounded, but it’s always a good idea to meet with a bankruptcy lawyer to see whether losing your assets would be a possibility. From there, you can evaluate whether you’re willing to take the risk.
If you’re thinking of filing for personal bankruptcy, you need to have a team of highly qualified attorneys on your side. Allow us to help you identify the best path to get your life back. Get in touch with our Tulsa and Oklahoma City bankruptcy attorneys to set up a consultation.