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When should you file for bankruptcy?

Deciding when bankruptcy is appropriate for your debt situations may be a difficult decision to make. Especially if you ask around to your friends who have tried bankruptcy, you could get different answers, making it hard for you to see your choices clearly.

Some friends may be in favor of the bankruptcy process if it worked for them and some of them may be against it if their bankruptcies failed to help. The thing is, when bankruptcy fails, it's more likely to be a sign that the filer didn't appropriately consider his situation before making the decision to file, and less likely a sign that the bankruptcy process if "flawed."

Here are a few questions that can help you decide if bankruptcy is right for you:

  • Are you using the bankruptcy to realign your finances and get back on track, or is there some other kind of reason?
  • Do you feel like you'll never pay off your debts?
  • Is your goal to prevent further financial bleeding?
  • Were you injured or ill and your medical bills are now unaffordably high?
  • Do you need to file bankruptcy because you lost your job or suffered from medical issues that prevent you from having a job?

All of the above reasons to file for bankruptcy are valid. If you answered yes to any of the above questions, however, it's important to fully understand the various bankruptcy options available and whether or not you could qualify for one of them. Then, you need to plan strategically for your bankruptcy and move forward with it as soon as you possibly can.

Source: USA Today, "Powell Q&A: I'm drowning in debt and 63 years old. Should I file for bankruptcy?," Robert Powell, April 18, 2018

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