If you’re struggling to pay your creditors, bankruptcy can offer a real lifeline and a chance for a fresh start. But the decision to file can also carry long-lasting negative consequences, and that means it should not be made lightly.  There is no universal right or wrong answer, so do your homework to ensure that you choose the option that is best for you.  Here’s a brief rundown of what you need to consider:

• There are two types of bankruptcy and choosing the right one is important. While Chapter 7 will discharge almost all of your debts, Chapter 13 simply reorganizes them and gives you more time to meet your obligations. Not everybody qualifies for Chapter 7.
• There are options other than bankruptcy, including credit counseling or taking out a loan from a 401K.
• If you charge up a storm in anticipation of getting your debt discharged in a bankruptcy, you can be accused of bankruptcy fraud. The same is true of moving money from your bank or investment accounts into a relative’s name in order to avoid having to liquidate assets.
• Your retirement savings are protected in bankruptcy, so don’t turn to them as a last resort … you’ll need them in the future.
• Not all of your debts will be liquidated in a bankruptcy. If you owe child support, back taxes or student loans, you’re still going to have to pay them.
• You might be able to keep some of your assets in a bankruptcy, but not all of them. Every state has its own rules about what is exempt or not, and a lot will be determined by whether you file for Chapter 7 or Chapter 13.
• Bankruptcy takes several months to complete. The good news is that as soon as you file, you will get relief from creditors and bill collectors calling.
• Bankruptcy is not a simple process, and it isn’t free either. There are filing fees required, and if you make a mistake you can end up losing assets that you’d prefer to keep. The best way to minimize its impact is to work with an experienced bankruptcy attorney who can guide you through the decisions and protect what is most important to you.

If you’re considering bankruptcy, the Reinherz team is here to help. Don’t hesitate to contact our experienced attorneys today!