Questions to Ask Yourself Before Filing Bankruptcy

If you are like most people, you like to pay your bills on time, fill up the gas tank when it gets low and enjoy happy hour with friends and co-workers. However, sometimes, life in Chicago goes sideways. Suddenly, bills are unpaid, late fees are accruing and things are getting out of control. You may think that filing bankruptcy is the best thing to do to buy some breathing room.

Money Crashers reports that bankruptcy can save you money, provide peace of mind and get you back on track, financially. However, it is not always the right step. In addition to having a huge impact on your credit score, it can be expensive. At Benjamin Brand, LLP, we often help our clients decide if bankruptcy is right for their circumstances.

Filing Chapter 7, 11 or 13 can have long-term effects on many aspects of your life. You may not be able to buy a new car, get a mortgage or pass the background check for a new job. Unfortunately, waiting until you’re completely broke before declaring bankruptcy can also work against you. Here are some questions to ask yourself when the bills are piling up, and you’re not sure if bankruptcy is right for you.

Do you know where your money goes?

If you don’t follow a budget, you may not know where your money goes on payday. How much of it goes toward bills such as utilities and rent? How much goes towards food? Do you have a car that guzzles gas? Tracking your expenses by using a budget program can help you see where your money goes and shows you how to make small changes that can make a big difference.

Can you find the money another way?

Picking up a second or third job may not be on your list of favorite things to do. If it’s temporary and it can help you get the breathing room you need, it may be worth it. Getting a part-time job and putting that paycheck toward bills can put a big dent in your debt.

Is your situation temporary?

Life happens! Unemployment, illness and other events can drain your bank account quickly. If you’ve lost your job, do you qualify for unemployment? What are your new job prospects? Consider waiting a few months to see if your situation improves.

Have you approached your lenders?

Lenders don’t want you to lose your house or file for bankruptcy. Many have programs you may qualify for that can help you stay afloat without filing for bankruptcy. Loan modification programs for Chicago mortgages and low fixed rate interest on credit cards can lower payments. These programs may change your repayment schedule or tie your payments to your income level. In either case, these options can help you preserve your credit score and still save you money.

Have you tried credit counseling?

Consumer credit counseling agencies can help you negotiate with lenders, create a realistic budget and help you develop a pay-down plan. There are many shady firms out there, so check with the Department of Justice for approved agencies so that you get the help you need, not a scam.

Filing for bankruptcy is a time-consuming process, and it requires that you meet specific requirements. It can also affect your day-to-day life, ensuring your disposable income goes to pay debts. The court has strict guidelines about what is considered “disposable.” Talking with an attorney experienced in bankruptcy and foreclosure can help you determine if bankruptcy is right for you, based on your circumstances. 

Located west of the Circle Interchange, our office is easily accessed from S Morgan St off I-290. There is street parking on Jackson Blvd and S. Morgan St. There is also pay for parking at 222. S Sangamon St, across the street.

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