When is it Time to File Bankruptcy?

By Sara C. Vyncke
The time to file bankruptcy is when your debt is taking over your life. You may be able to work out a payment plan with a creditor, but sometimes a person’s debt is so high that that repayment is virtually impossible. This situation is only made worse by constant creditor calls and/or garnishments to their wages and or tax refunds. Often creditors are so aggressive that debtors are afraid to answer the telephone which only adds to the stress of not being able to pay what is owed.
One large benefit to bankruptcy is that CREDITORS must STOP CALLING you once the bankruptcy is filed. Further, GARNISHMENTS STOP while the bankruptcy is pending. Assuming that the debt is discharged at the end of your bankruptcy, the calls and garnishments cease forever.
Although filing for bankruptcy may be daunting, it can help you get out from under insurmountable debt and help you rebuild your life.
The bottom line: If debt is ruining your life, it is time to consider filing for bankruptcy.

What Debts can be Discharged in Bankruptcy?


Bankruptcy is an excellent tool to eliminate unsecured debt such as credit cards, medical debt, deficiencies resulting from foreclosure and repossession. These types of debts are discharged at the conclusion of the bankruptcy process in both Chapter 7 and Chapter 13 bankruptcy. In a Chapter 13 bankruptcy, you may be required to pay a portion of the unsecured debt through your repayment plan.

However, not all debts can be discharged in bankruptcy. Child support and spousal support arrears, recent tax debts, and student loans are non-dischargeable, meaning the debtor is still liable for these debts even after the completion of the bankruptcy process. Further, if you have debts that are secured by property, such as a home or vehicle, you will have to continue to make payments on these items in order to keep them.

It is always a good idea to evaluate all your options prior to filing bankruptcy. An experienced attorney can help you decide if filing bankruptcy is the right decision and what Chapter of bankruptcy may be right for you.