• DYE CULIK PC | Consumer Protection Division

When It’s Financially Responsible to File Bankruptcy




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A discharge is obviously beneficial for individual families, as it frees up money that would otherwise be spent on credit card bills, which in most cases goes mainly to interest. Rather than pushing off expenses so that the bills can be paid, a bankruptcy discharge allows you to use your money for household purposes and things your family needs. For entrepreneurs, the possibility of a discharge operates as insurance for a bad investment, and frees up money to make future investments.

In addition to these personal benefits, though, a bankruptcy discharge also has larger economic benefits for the country. Millions of people have filed bankruptcy over the past few years as a result of the recession. If there were no bankruptcy laws and people were required to repay all debts regardless of circumstances, then there would millions of people who could not afford provide for their family and purchase items they need. We are a consumer based economy, and it would be detrimental for both individuals and the economy if people were not given the opportunity for a fresh start.

People often wonder how much debt they should have in order to file bankruptcy. The short answer is that there is no eligibility requirement, so bankruptcy is an option whether you have $100 or $100,000 in debt. But whether bankruptcy is a good option for you is a much more complex question. In addition to the amount of your debt, the decision to file should be based on a number of other circumstances including your household income, your household assets, whether you expect to need credit in the near future, and whether you are judgment proof.

Generally speaking, if you are struggling to make the minimum monthly payments on your credit cards, are facing massive medical bills, or have been hit with unexpected income loss and associated debt, then bankruptcy may be worth considering. Retirement accounts are generally fully protected, as well as several thousand dollars in other assets. These assets are certainly important, so you should not wait to file until these assets are used up to pay down your debt.

Through bankruptcy, you may be able to protect your assets and ensure that your future income can be spent on more appropriate household expenses. As a result, depending on your circumstances, bankruptcy may be the most responsible decision for you, your family, and the overall economy. For an in-depth consultation to review your options, please contact us today.

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