Are You a Candidate for Bankruptcy?

Are You a Candidate for Bankruptcy?

 

The word bankruptcy has negative connotations for most people. You may think that you will never be able to purchase a home or a car, or that others will think that you are shirking your financial responsibilities. In fact, bankruptcy can be a viable alternative if you find that your debts exceed your liquid assets and you’re in over your head with IRS collections.

Questions to Consider

To determine if you are in a financial danger zone, ask yourself the following questions.

  • Am I constantly getting calls from bill collectors?
  • Am I overwhelmed by finances that are out of control?
  • Am I using my credit card to pay for necessities?
  • Am I only paying the minimum on my credit cards?
  • Am I unsure how much debt I actually owe?
  • Have I thought about debt consolidation?

Answering yes to two or more of the above questions indicates that you are on the edge of a financial cliff and need to look at all of your options. Some of the most common reasons for filing bankruptcy include divorce, excessive credit card debt, unexpected medical expenses, unemployment, and delinquent employment tax.

Types of Bankruptcy

The most common form of bankruptcy is called Chapter 7. In this type of bankruptcy, all of your personal assets are sold to third parties with the money being used to pay off your creditors. This can mean selling your home, business, vehicle and other personal items of significant monetary value, which is why this type of bankruptcy may not be the best option for everyone.

A Chapter 13 bankruptcy allows you to pay off your debts over a period of several years. Any remaining debts are discharged at the end of the grace period. This type of bankruptcy stops collection attempts and allows you to keep your personal property.

An attorney or CPA in San Diego can help you analyze your financial situation to determine if bankruptcy may be the right option for you. Contact R.A. Michael and Associates at (844) 780-1100 today to learn how we can help you avoid bankruptcy and evaluate your tax options.