Bankruptcy – Knowing When to File for it?

Bankruptcy is a terrifying proposition, as the word itself sounds ominous, but it doesn’t have to be. The media batter us with nightmare stories of seemingly strong business giants going from bedrock to bankrupt. After all, we are living in an economy in which credit card bills often clutter our mailboxes, and living in debt is an accepted norm.

Now, the question that arises in everybody’s head is – Is there any relief from this problem? Fortunately, yes, as bankruptcy is a fast-growing issue across the world, sincere solutions are being discovered to resolve it.

Bankruptcy lawyers in Colorado are offering committed services to bail their clients out of this prison. However, it is crucial to know when to throw the towel in and declare bankrupt.

Here is a list of a few questions that will help in assessing the financial danger zone:

• Do you make only minimum payments on your credit cards?
• Are the bill collectors calling you regularly?
• Does the thought of managing your finances scare you?
• Do you use credit cards to pay for necessities as well?
• Are you unsure about how much you owe?
• Are you considering debt consolidation?

Assess Your Situation

If you answered yes to two or more questions, you should at least give your financial condition a little more thought. To discover where you are standing financially, inventory all your liquid assets, and don’t forget to include retirement funds, bonds, stocks, real estate, vehicles, college savings accounts, and other non-bank account funds. Make a rough estimate of each item.

Now, collect and add your credit liabilities and bills, if the value of the debt you owe outweigh the value of your assets, it’s time to declare bankruptcy.

Chapter 7 Bankruptcy

There are several reasons for filing Chapter 7 bankruptcy, such as unemployment, overextended credit, medical expenses, and marital problems. It liquidates your assets and pays off as much of your debt as possible. The money from your assets is distributed among creditors like banks and credit card companies.

Chapter 7 offers a quick and fresh start to many people, but it isn’t the right option for everyone. Almost every asset is taken and sold to repay creditors, and if a debtor owns a company, or a home, or any other personal asset, this may not be the best option.

Chapter 13 Bankruptcy

Filing Chapter 13 bankruptcy will be a better option for people who have property they want to keep. It allows people to pay off their debts over a period of 3 to 5 years. Chapter 13 offers a grace period for people who have consistent, predictable income. Any remaining debts at the end of the grace period are discharged.

Conclusion

It is hard to admit you need help in getting out of debt, but declaring bankruptcy is sometimes necessary. With good bankruptcy lawyers in Colorado and the right information, filing bankruptcy can provide the financial help you need to get a fresh start.