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When is bankruptcy a good idea?

While many people think that bankruptcy is something to avoid at all costs, the truth is that it can be a good idea for people in certain situations. There are many things to consider before you opt to enter into bankruptcy, but if you find that you cannot get out of debt and want to get a second chance to start over, it could be the right choice for you.

Before you choose to enter into bankruptcy, you need to research the types available to you. If you don't mind losing some of your personal property, then a Chapter 7 bankruptcy, or liquidation bankruptcy, may be the right choice. On the other hand, if you can make payments for three to five years on time, a Chapter 13 bankruptcy is a better choice. This type of bankruptcy doesn't require you to sell or liquidate any of your assets.

Bankruptcy is a good idea for those who truly have no alternatives. Many people do have alternatives, though, without knowing it. Some people, for example, can consolidate their debts or make other changes to get out of debt without needing to go into bankruptcy. This could help prevent damage to their credit scores, so avoiding bankruptcy may be right for them.

Remember, not all debts are forgiven in bankruptcy. If you're struggling with tax debts or child support payments, you may not want to consider bankruptcy, since it won't help with those debts at all. Your attorney can help walk you through your assets and debts to determine if bankruptcy could be the right decision.

Source: FindLaw, "Is Bankruptcy a Good Idea for You?," accessed Nov. 08, 2017

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