Should You File Bankruptcy or Try to Pay the Debt Off?
If you are struggling to decide between declaring personal bankruptcy or paying off your debts, then it’s important to address a few truths about your current financial situation. You’ve been struggling to keep up with the bills for a while now. You’ve made every attempt to make on-time payments for your mountain of credit card debt , medical bills, and loans. You’ve even tried setting up a household budget to squeeze out some extra money to throw at your bills.
But no matter how much money you put towards that mountain of debt, it only seems to grow bigger. Now you’ve found yourself wondering: “Should I just declare personal bankruptcy? Or should I keep making the attempts to pay the debt?”
If you’re struggling to find the answer to these questions, this article can provide you with the relief you’ve been looking for:
Assess The Lifetime of Your Debts
Assessing the lifetime of your debts is a vital part of the decision-making process, and for good reason: if it’s going to take you ten to twenty years (or even longer) to pay off your debts, declaring personal bankruptcy may be your best options.
Why is this, you might ask? Simple: personal bankruptcy only remains on your credit score for seven to ten years, depending on the type you’ve filed, and you can start rebuilding good credit within a couple of years. However, struggling under a mountain of debt for a few decades can continue to harm your credit score. The toss-up becomes clear: deal with not-so-stellar credit for a handful of years, or resign yourself to long term financial issues.
Can You Only Make Minimum Payments?
Speaking of the lifetime of your debts, there’s no denying that minimum payments are designed to keep you in debt for longer periods of time. This way, lenders can make boatloads of money off of the interest rates. If you can only make minimum payments on your debts – and there’s still plenty of debt to tackle – you may consider filing for personal bankruptcy.
Is There New Income in Your Future?
If you are set to get a promotion in the next few months, or you’ve designed a new income stream that will work out for you, it’s best to hold off making this decision until you see how the new income affects your finances. But if that income can’t be used to put towards your debt, you may want to consider talking to a qualified bankruptcy attorney .