There are times when dealing with your debt issues seem totally overwhelming. You get sick of the phone calls, you get sick of the worry, you get sick of wondering if fighting the debt collection lawsuit is the right way to go.
Other times, even if you are up for the battle and ready to fight on, you need to take step back and evaluate whether it makes financial sense to continue down the road you are heading.
The point is, sometimes the best tactic is to invoke the nuclear option and just file for bankruptcy. Here are three things to consider before throwing in the towel:
#1 – How Bad is Your Overall Debt Picture?
If you win your current debt collection lawsuit, and you have a good chance of doing that, will it be replaced by three other creditors waiting in line? Do you have serious credit card or medical debt? Have you recently had a repossession or foreclosure? All of these things should play into your decision on whether you continue the good fight or seek out the fresh start of bankruptcy.
#2 – Do You Qualify for Bankruptcy?
Before you give up on defending your debt collection lawsuit it may be a good idea to meet with a bankruptcy attorney and get some idea of whether you qualify to file a chapter 7 bankruptcy. Back in 2005 the bankruptcy laws where changed and now if you make more money than the average family of your size in your state you may not qualify for a chapter 7 bankruptcy. If you don’t qualify you need to research out alternative chapters of bankruptcy or continue fighting your debt collection lawsuit.
#3- Are you a Good Candidate for Bankruptcy?
Let’s say you qualify for bankruptcy. Great. But that is just the first step. You need to a bankruptcy lawyer to evaluate the big picture of your finances and determine if you are at risk of losing assets. There are other potential bankruptcy landmines that you need to be aware of such as have you paid any family members back in the last year? Have you transferred any assets out of your name in the last couple of years? If you answered yes to either of those questions you should meet with a bankruptcy attorney to determine if it is a good option for you.
Sometimes people jump too quickly into bankruptcy when if they stood their ground and fought the debt buyer they could make that lawsuit go away. However, sometimes bankruptcy is necessary. In the end, you end goal is the same, you are just taking different routes to get there.