Recently on our bankruptcy forum a user asked, “Will bankruptcy give me a fresh financial start?” Although this would seem like an easy question to answer, the answer is it depends. Bankruptcy has been created as a legal means to help some individuals discharge certain debts and allow them to get a fresh financial start, but whether or not this will work for you will depend on your debts.
Additionally, if you have consistently made bad choices which have put you in a precarious financial position, bankruptcy may not help (at least not for long). Consumers who consistently make financial choices such as spending more money than they have may file bankruptcy and simply find themselves in the same financial position a few months later.
Will bankruptcy help me get a fresh financial start?
Bankruptcy is most helpful and can help create a fresh financial start for the individual who faced some type of crisis and found themselves in a financial hole. For instance, if your spouse died unexpectedly, if you have recently been divorced or if you have suffered a serious injury or disease and now have high medical bills or credit card debt, bankruptcy may be able to help you.
If the above describes your situation and you qualify for Chapter 7 bankruptcy you may be able to discharge your unsecured debts and get a fresh financial start. If you cannot file Chapter 7 bankruptcy your debts will not be immediately discharged, but you still might find some financial relief by filing Chapter 13 bankruptcy and rescheduling your debt payments over 3 or 5 years.
Who does bankruptcy not help get a fresh financial start?
Not everyone will benefit from bankruptcy or get a fresh financial start. For instance, if you have spousal support, child support payments, certain tax debts or federal student loans these are not discharged in bankruptcy (exceptions are made for certain student loans if you can prove undue hardship). So with this in mind, if this is the bulk of your debt, bankruptcy is not your best option.
Another type of person that bankruptcy does not help get a fresh financial start is the compulsive spender. We all know the guy. He buys cars, clothes, and jewelry he cannot afford and charges it all on a half dozen credit cards, never a care in the world to how he will pay the bills. Although this type of consumer may have some of his debts discharged, it’s likely he will be in the same financial position after a few years. This person needs to take a serious look at his spending habits rather than file bankruptcy.
So back to the question, “Will bankruptcy help me get a fresh financial start?” Bankruptcy is a good solution for some individuals and not for others. If you are unsure about your options it’s important to talk to a bankruptcy lawyer. Lawyers should be able to talk to you about all of your options for resolving your debt, not just bankruptcy. A good lawyer recognizes that bankruptcy is not right for everyone. Some consumers are better off simply creating a budget, generating more income, cutting their expenses and repaying their debt.
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