Filing Bankruptcy

Filing Bankruptcy

How to make the decision to file bankruptcy

Filing Bankruptcy

It's a touch choice, no matter what the law makers and credit card companies want us to think. The majority of people who file bankruptcy each year, over 1.5 million people filed in 2002, do so due to loss of employment or serious medical issues. Less than 9% of bankruptcies are filed for other reasons. Unemployment rates are at the highest rate we've seen in decades and the number of uninsured working families is growing at the same time - this means several of you reading this article are probably considering bankruptcy.

So how do you decide if you need to file bankruptcy? There are several factors to consider including your debt levels, current income, how far behind you are on payments, and the amount of stress that your financial problems are causing.

Most people who file bankruptcy have debt levels over one and a half times the amount of their salaries, with short payment terms and high interest rates. When faced with unemployment or prolonged health issues and medical bills, these debt levels are simply unbearable.

Considering how far behind you are in payments is essential when deciding to file bankruptcy, especially if you are a home owner. In most cases, foreclosure can be started when you are just two months behind in your mortgage payments. Other debts like credit cards also start adding on hefty late fees, which could also take you over your credit limit triggering more fees, adding dramatically to your debt levels. By researching your choices immediately you will have the best chance of saving as many of your assets as possible.

Stress caused by your financial problems is often more overwhelming than your actual debts. Dealing with creditors calling, mounting debts, fears of losing your home, or worse, can leave you unable to cope with normal daily life, and even cause more health problems such as depression. Bankruptcy filers often feel better after just making a decision because they are able to start planning their life again. They can see the steps that need to be done to rebuild their credit, without having to answer the phone with a feeling of dread anymore.

Making the final decision to file bankruptcy is very hard, and there are lasting effects on your credit. But chances are, if you are considering bankruptcy, and have exhausted other options like credit counseling, your credit has already been affected, and bankruptcy can put you back on track.

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