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5 questions to ask before filing for bankruptcy

On Behalf of | Mar 13, 2024 | Bankruptcy |

Bankruptcy has long been a taboo subject among many, but some situations make it necessary to file. If you are considering going this route in Connecticut, you need all the information you can get. Make sure you can answer these questions before making your decision..

Have I exhausted all other options?

You should know whether or not you’ve exhausted all other options before filing for bankruptcy. Creditors are often open to working with people who reach out to them about repayment options. You can also get credit counseling and a debt management plan forgiving interest, which makes it easier to repay. These avenues show creditors you’re serious about satisfying your debt.

Do you have enough debt?

You can only file for bankruptcy if you have sufficient debt. If it’s enough to repay without burdening you, you might want to rethink it and satisfy your debt. Also, remember that bankruptcy stays on your credit report for years.

Do you have dischargeable debt?

Bankruptcy is only worth filing if you have dischargeable debts. This includes credit card debt, medical bills, personal loans and, in some cases, student loans. Anything coming from lawsuit judgments such as alimony, child support or criminal or civil actions cannot be discharged through bankruptcy, so you’ll still have to pay. If you have mostly the latter, filing won’t benefit you.

Are debt collectors harassing me?

If you’re being harassed by debt collectors, it’s a sign that you’re a good candidate for bankruptcy. Once you file, collector calls and letters should stop as further contact is illegal.

Which type of bankruptcy can I file?

Knowing whether you can file Chapter 7 or Chapter 13 bankruptcy is crucial. If you have limited income with little to no assets, you’re eligible for Chapter 7. Chapter 13 is appropriate if you have a higher income and can afford to pay but need more time. The latter gives you 3 or 5 years to repay.

Bankruptcy isn’t for everyone, and it should be your last resort. However, filing can give you a financial fresh start.

photo of attorney R. Richard Croce