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Chapter 7 bankruptcy: Should it be your first choice?

Most people look at Chapter 7 bankruptcy as an embarrassing process that they should avoid at all costs. In fact, most bankruptcy filers wait until the last possible moment before filing for bankruptcy because they feel it's a "last resort" option that indicates failure and "giving up." This perspective couldn't be any further from the truth. In fact, if you can qualify for Chapter 7 bankruptcy, the sooner you start the process, the better off you'll be.

It's for this reason that financial advisors recommend Chapter 7 bankruptcy as a "first resort" and not a "last resort." Think about it this way. Chapter 7 proceedings cost between $1,500 to $1,800 to complete. Furthermore, they take approximately 90 days. For a lot of credit card holders who have $22,000 in debt, this is a cost of about three months of credit card payments. So, for the cost of three months of credit card payments, an individual with $22,000 of debt could go from struggling to debt free in the same amount of time.

Debt holders may want to consider bankruptcy as a "first resort" when they think of the fact that paying off their debt over a long period of time is seriously hurting their future retirement savings. Imagine you were putting the same amount of money into your retirement as you are using to pay your credit card debt interest. This amount of money could be generating interest and growing to support your future. Instead, it's doing the opposite.

If you're struggling under a large amount of credit card debt, and if you want to make that debt disappear, you may want to learn about your options for bankruptcy. It could be the best financial decision you make for yourself and your future.

Source: Huffington Post, "Why a Chapter 7 Bankruptcy Should Be Your First Option and Not a Last Resort," Steve Rhode, accessed Nov. 24, 2017

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