If you are having trouble paying your bills, you may be thinking about entering into some sort of debt repayment plan or filing bankruptcy. It is recommended that you meet with a financial counselor or bankruptcy attorney to help you determine which is the better option for you. This may leave you wondering how an attorney or counselor decides which is the best option for you. Here are a few of the factors they look at when deciding whether bankruptcy or debt repayment plans are right for you.
Your Income and Debt Amounts
The biggest factor that is looked at when determining whether bankruptcy is right for your is your income and your debt amounts. Generally speaking, if you make enough money to pay back your debts, bankruptcy is not the right option for you. However, if you are drowning in debt and don't make enough to pay it back, bankruptcy may be the better option.
Your Assets
Another factor that is looked at when determining if bankruptcy is right for you is your assets. In some cases, you may be cash poor, but have a lot of assets. Maybe you own multiple cars or homes. In these cases, if you decided to file for bankruptcy, the courts may force you to sell off these extra assets to pay off your debts. You can do this on your own without being told to, so if you have a lot of assets, it may be best not to file and simply sell things off on your own to cover your bills.
What Type of Debts You Have
The last factor that is looked at when determining whether bankruptcy is right for you is what type of debts you have. Some debts, such as debts from lawsuits and student loans, can't typically be discharged in bankruptcy proceedings. As such, filing won't help you if this is the type of debt you are struggling to pay off. However, credit card debt and other consumer debt can be discharged. If this is the type of debt you have, bankruptcy may be ideal for you.
Need more answers?
If you are considering filing for bankruptcy in Dakota, Hennepin, Ramsey, Washington or Scott counties in Minnesota, you may wish to consult with a lawyer before you do so. Ron Lundquist specializes in bankruptcy and can help you determine if bankruptcy is the best option for you. Schedule a consultation today to start to get your finances back on track.