Basically, you should file for bankruptcy if you are in significant debt, and possess a lot of income or other assets (home, vehicle, etc.) that creditors may be able to garnish.
Seattle, WA – Over the years, bankruptcy has come to carry a host of unpleasant connotations. Going bankrupt is the target of much stigma and disdain in our present society, which keeps many people from filing for bankruptcy when they should.
However, the way it was designed, the U. S. Bankruptcy Code is actually here to allow debtors a way out of a critical situation. It helps you repay your debts, and offers a safety net for creditors, and other entities that otherwise stand to lose money through loans.
As such, our lawyers see a lot of clients who unnecessarily delay filing for bankruptcy and incur even more severe debt and financial woes. So how do you know you should file for bankruptcy, and when?
How does bankruptcy work?
In Washington, bankruptcy falls under federal law and typically presents individuals with two options – liquidation of assets (Chapter 7 bankruptcy) and financial reorganization (Chapter 13 bankruptcy).
You’ll need to consult with Seattle bankruptcy lawyers, and they’ll help you determine which one you qualify for, and should choose. They each carry their own pros and cons, but they hinge on your median income, and the assets you stand to lose/keep, so this is not a decision to be made lightly.
Who should consider bankruptcy?
Basically, you should file for bankruptcy if you are in significant debt, and possess a lot of income or other assets (home, vehicle, etc.) that creditors may be able to garnish.
You should consider other options first. In fact, the law makes sure you do by insisting you take a credit counseling course before filing for bankruptcy. Through this, you will explore methods to reorganize your assets to stave off debt, but also avoid bankruptcy.
Alternatives you should explore before filing for bankruptcy:
- Negotiating lower interest rates;
- Earn extra income;
- Borrow from family/friends – you should not take out a loan, mortgage, or second credit card to pay off debt;
- Explore debt settlement and debt consolidation.
Only after you’re sure there isn’t another way for you to earn more money and pay your debts should you file for bankruptcy. Before you do, make sure you consult with our experienced Washington bankruptcy lawyers.
Who should not file for bankruptcy?
While bankruptcy can be a good idea for many people, it’s not always the best option. People who do not stand to lose many assets or a lot of income because of debt probably wouldn’t benefit from filing.
Likewise, if you are unemployed, or rely on a primary source of income that is exempt (e.g. social security, retirement account, child support), you shouldn’t file for bankruptcy.
Tip: According to Washington law, you can only file for bankruptcy once every 8 years. So if you’ve filed in the previous eight years already, you may have to look for another solution to your financial problems.
Bankruptcy can only help in some situations, and if you are unsure if it can help you, it’s best to consult with Seattle bankruptcy lawyers before taking legal action of any kind.
Also, since you’ll be dealing with lawyers and court clerks for the next few months, now would be a good time to educate yourself a bit on legal matters.
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