How to Determine if You Qualify to File for Bankruptcy
File for Bankruptcy
When it comes to evaluating your financial stability, you don’t want to presume anything. This would be especially true if you are contemplating filing for bankruptcy.
Yes, that would be a major step in your financial life because of the profound effect it would have on your credit score.
Just the same, bankruptcy might be the only option you have for getting out from under mounds of unsecured debt.
Before you start the filing process, you might benefit from knowing ahead of time whether or not you will qualify.
There are certain aspects of bankruptcy law to which you will need to abide by. With this in mind, you should take a look at the following five suggestions about when you should seriously consider going the bankruptcy route.
The Means Test
A means test exists to help you determine just how dire your finances have become.
You can use the means test to see if your monthly disposable income falls above or below the median amount in your state. If it falls below, you could be a candidate for bankruptcy.
Debt to Income Ratio
If your unsecured debt amount is 50% or more of your annual income, you do not have financial security. That number alone could be the basis for you filing for bankruptcy.
Monthly Disposable Income
No one expects you to live a life without the ability to enjoy certain things. If you have little to no disposable income for the extras in life, you might be a candidate for bankruptcy.
Time Needed to Extinguish Debt Load
As a rule of thumb, your income level should be high enough that you can pay off your unsecured debt in five years or less.
If you are not in a position to do that, bankruptcy might be the right call.
Stress Levels
There has to be some quality in your life. If debt-related stress is having a profound negative effect on your life, you need to look after your overall well being. Doing that might make bankruptcy a viable solution to your stress.
As was stated at the beginning, you should not presume anything about your financial situation.
If you have reasonable doubts about your ability to pay off your without suffering in other areas of your life, you should file for bankruptcy as a serious option.
If you have concerns, you should contact a bankruptcy attorney to review your options.
Category: Bankruptcy
