"Should I file bankruptcy" is a very common question. Although Americas bankruptcy laws date back to the 1800's, deciding to file is much more common today than at anytime in the history of our country. In responding to the question, I have often used a simple rule to evaluate whether filing bankruptcy appeared to be a good financial decision. If the person owed more than half of their annual income to unsecured creditors, filing bankruptcy was a sound financial decision. In such a situation the person would almost never be able to get out of debt.
Putting the economics aside, the decision to file Bankruptcy is a purely personal decision. In this Country, with few exceptions, we do not put people in jail because they did not or cannot pay their debts. Therefore, if you have no assets and no steady income, the creditor can not get anything from you. In that situation a person is commonly called judgment proof. A judgment proof person may still want to file bankruptcy to get a fresh start. It is easier to get motivated to get a better job and acquire assets when you do not have to worry about having it taken away by a creditor.
Whether to file bankruptcy may depend on the consideration of how the decision will change the quality of your life. If the creditors are not calling and you're not receiving letters threaten to sue than the fact that you owe the money may have no effect on the quality of your life. If you are receiving calls and letters, and you are struggling to pay some of the creditors to keep them at bay, or more importantly, if you are borrowing from one creditor to pay another, you likely have serious quality of life issues that need to be addressed. In such a situation the elimination of your debt seems more like a necessity than a choice.
During the Bankruptcy process, many negative emotions may go through a debtor's mind. One common tendency is for a debtor to feel as if they are giving up or they are taking the easy way out. For those with these concerns I simply remind them that for most people the majority of the debt you seek to eliminate is the money owed to credit card companies. Then remember that these companies raised your rates when you fell a little behind virtually assuring you would ultimately not be able to pay the debt. www.Legalcreation.com
Kevin Pratt is Attorney in Law in Georgia and focuses his practice in business law, corporations and limited liability companies, real estate transactions, tax deferred like-kind property exchanges, secured lending, and real estate litigation. Kevin Pratt has assisted hundreds of entrepreneurs in the creation of business entities such as Corporations, Limited Liability Companies, or Partnerships to facilitate their particular needs regarding, taxation, financing and limited personal liability. For more information please visit www.LegalCreation.com
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