A Checklist for Deciding Whether to File BankruptcyShare
Filing for bankruptcy can feel like a big and scary step to take. Worse, you may not be sure if you're even eligible to file. If you're not confident about whether you should file or not, use this checklist to help you decide.
Assess Your Financial Situation
You can't make an informed decision if you don't know what the numbers are. If you can't state right now how much you owe and to whom, start putting the information together. Contact creditors and ask them for balances in writing for your accounts. Go through your recent pay stubs and determine how much you have coming in. Check your tax returns so you can reasonably guess what you'll owe or expect back next year.
Until you address these questions, you can't tackle the other items on this checklist. Obtain paperwork to determine your debts and income. Make copies to share when you start searching for a bankruptcy lawyer, and then store the originals safely.
Quantify the Problem
You need to figure out what all of your debts add up to. Particularly, you will want to determine if you have any chance of getting out of debt if you keep making your current payments. If not, there's a good chance bankruptcy is the right solution for you.
Make a Ballpark Estimate of Your Eligibility
The simplest and fastest eligibility rule says you can file for bankruptcy if you earn less than half of your state's median income. Even if you won't automatically qualify, your odds are likely to be better the closer your income is to this number.
However, you should note this isn't the only eligibility scenario. You can still provide evidence of your debts and your inability to pay them. Speak with a bankruptcy attorney, though, before concluding that this is a possibility. They can tell you based on experience what the odds of a successful petition are.
Note Previous Bankruptcy Discharges
If you have recently filed for bankruptcy and a court discharged your debts, you may or may not be eligible to file again. Note a filing is not the same as a discharge. If the court didn't discharge any debts, you have the right to file again as soon as possible.
When the court discharges debts under Chapter 7, the petitioner must wait 8 years from the filing date before seeking Chapter 7 again. Likewise, going from Chapter 7 to 13, you'd have to wait four years.
If the court discharged debts under Chapter 13, you must wait at least two years to petition under Chapter 13 from the filing date. Chapter 7 is immediately available if you've paid at least 70%.
Contact a bankruptcy lawyer to learn more about the options that you have.