Filing bankruptcy can be a long and tedious process and since most people only file for bankruptcy once in their lives, the process is going to be quite confusing.  Some don’t know what to do and some don’t even know if they qualify.  I’m going to highlight some things and hopefully by the end of the post, you’ll have a better understanding on if you’re eligible or not.

Know your bankruptcies

There are basically two types of bankruptcies that you should be familiar with.  There’s Chapter 7 and a Chapter 13.  Here’s what each one means –

• Chapter 7:  A Chapter 7 bankruptcy is pretty much starting from scratch.  This is where you’ll wipe away all of your debts and start with a new slate.  Keep in mind though that some debts such as child support, student loans, etc may always be with you.
• Chapter 13:  A Chapter 13 is very different than a Chapter 7.  When you’re dealing with Chapter 13, you’re going to eventually pay off your debts but with a no-interest loan or a plan that is presented to you by the court system.

Why do you want to file?

One of the main reasons that people file bankruptcy today is solely because of medical bills.  Are you filing because you have a lot of medical bills or is it because you couldn’t manage your credit cards at the local mall?  You really have to sit back and decide on why you’re going to file.

Is it going to help?

If you’re constantly being harassed by creditors and you lose sleep at night thinking about losing your house, etc, you’ll probably want to start looking at bankruptcy as soon as possible.  The longer you wait, the more damage you may do to your own health due to stress.  Bankruptcy not only lifts a little weight off your shoulders, it allows you actually get sleep at night once again.

How much debt do you have?

Experts generally will say that if your debt can’t be paid off within 4-5 years then you should file for bankruptcy.  If you feel like it’s going to take long time to pay back your debts or you feel that the time seems ages away, you might as well declare now so that 7-10 years down the road, you’ll have a good credit score once again.

You have to think long and hard when it comes to bankruptcy.  With the strict laws in place today, you have to work two times harder to get the bankruptcy courts to side with you.  Don’t just declare because you can.  Instead, think of other ways you can make money and pay off your debts.  Paying off your debts feel a lot better than just taking the easy street.