People who have faced unexpected life events such as losing a job due to the coronavirus and can no longer pay their debts often ask Should I File Bankruptcy. There are many reasons bankruptcy is a smart move and file for Chapter 7 bankruptcy or Chapter 13 bankruptcy. However, declaring bankruptcy can improve your financial situation. Your credit score (bankruptcy will stay on your credit for 7-10 years but will not prevent you from getting new credit lines) and provide you with a fresh start. It may not be right for everyone, and you should inform yourself about what bankruptcy can and cannot do.
Reasons to File Bankruptcy
There are several reasons to file bankruptcy, and often, bankruptcy may be your best solution:
- You have tried to negotiate with creditors. There are different alternatives to bankruptcy. Typically your first step should be to arrange a repayment plan with your creditors on your own. This is not an easy task. Often they demand full payment and do not want to be paid overtime. This situation leaves you with few choices other than filing for bankruptcy.
- Your debts exceed your income. Some file for bankruptcy because they cannot afford to pay the high-interest rate on their credit cards and other debts. For some, just making the minimum monthly payments with interest surpasses their monthly income.
Who files for bankruptcy?
People from all walks of life file for bankruptcy. Unforeseen life events, the type that causes people to file for bankruptcy, do not discriminate based on age, marital status, or even income level. It’s commonly believed that somebody who files for bankruptcy is a wild spender and budgets poorly, but statistics indicate this is not the case. According to CNBC, unexpected medical bills were the largest cause of bankruptcy. The reality is that bankruptcy affects every socioeconomic class and age group. There is not an average or typical bankruptcy filer as every person’s situation is different. A review of the September 2020 filing statistics published by the US Courts website indicate averages, but the actual spread is quite large. The takeaway is that if you are struggling with debt, bankruptcy may be your best option, and you should contact a Miami Bankruptcy Lawyer to discuss your options thoroughly.