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Should You Declare Bankruptcy?

Bankruptcy can be a scary idea, especially for people who have never had to consider it in their lifetime. Thankfully, bankruptcy rates are beginning to decline since the collapse of the market when millions of people every year would file. Now, under 800,000 Americans file yearly. This is overall good news. However, with the number still well over a half a million, there are many people who struggle with the decision of whether filing for bankruptcy will help their financial situation. Here are a few things to consider when making this decision.


What is the Cause?

Many people who file for Chapter 7 or Chapter 13 bankruptcy do not understand the root cause of the financial problems that got them to that point. Take a good look at your financial situation. What is causing the hardship? Do you have overwhelming medical bills due to an illness? Or maybe a loss of a job or death of an earner in your family are the cause? Possibly credit card debt or loans could be the problem. Speak to a financial specialist who can help you get to the root cause so if you do decide to file then it will be a “one and done” proposition where you will be able to understand the issue and not have it repeat itself in the future.


What type of bankruptcy?

Once an individual has decided to declare bankruptcy, it is important to understand the types available. A Chapter 7 bankruptcy will liquidate your assets to pay off as much of your debt as possible. An individual must meet a means test and almost all assets are taken and sold to repay creditors (even the assets you would like to keep). A Chapter 13 bankruptcy reorganizes your debt and allows you to repay it over the course of 3-5 years.


Advantages and Disadvantages

While every debtor’s story is different, there are some pros and cons to filing for bankruptcy. The immediate advantage of filing bankruptcy is an “automatic stay,” which puts your creditors on notice that they have to stop trying to collect money from you. This means no more harassing phone calls, letters, wage garnishments, seizing of your property or lawsuits. If your bankruptcy goes as planned you will either have discharged your debts or reorganized them depending upon the type. Be aware that some debts, like student loans and child support, do not disappear. In addition, your credit score will be impacted for many years to come.


Do you need help deciding if bankruptcy is right for you? Contact the Law Office of Barry R. Levine today by phone at 978-922-8440, or visit our website at