Few things in life can cause as much anxiety, confusion, and apprehension than making the decision to file bankruptcy. Filing bankruptcy, after all, is a big decision and has long term financial and personal implications. While no one’s financial situation is ever exactly the same, there are certain instances where it may make more sense to file a Chapter 7 or Chapter 13 bankruptcy. In these situations we will look to answer the question: “Should I File Bankruptcy?”

Timing

The timing of filing a bankruptcy is important and if you file bankruptcy at the incorrect time it could cost you dearly by having to give up property you could have otherwise kept as an example. Additionally, filing bankruptcy at a period of time in which your income is unusually high could be another mistake that could cause your bankruptcy case to be dismissed. Alternatively, if you are facing foreclosure, wage garnishment, repossession, or having your utilities cut off, it may be the best time to make the decision to file bankruptcy.

Financial Situation

When facing the threat of home foreclosure, bankruptcy’s automatic stay can help you save your home, however, your bankruptcy attorney may suggest attempting to modify your mortgage directly with your lender first assuming that you don’t have a large amount of other debts.

Life Situations 

When you file a chapter 7 bankruptcy, the bankruptcy courts will require you to take a means test which looks at your income over the past 6 months. Therefore, it makes the most sense to file a bankruptcy when your recent income has been low. If you file when income is high you may not be able to qualify for Chapter 7 bankruptcy at all and will have to then consider filing Chapter 13 instead or delaying your bankruptcy filing until a later date. Medical debt and credit card debt are among the two most common reasons individuals file Chapter 7 or Chapter 13 bankruptcy. If you have more debt in these two categories than you can afford to pay back, bankruptcy may be able to discharge some or even all of this type of debt typically referred to as nonpriority debt.

If you are wondering if you should file bankruptcy, then the logical next step is to make an appointment with a bankruptcy attorney to go over your current situation. An experienced Sacramento bankruptcy lawyer is a professional with the ability to assess your finances and either recommend bankruptcy or another option such as a debt consolidation.