Each one’s financial situation is different, so there’s no definitive answer to this question. You’ll need to consult a bankruptcy attorney, or at least a non-profit organization specializing in credit assistance.
But still, there are some situations when bankruptcy may become a viable option. You need to keep in mind that a bankruptcy these days is not a sign of moral failure, but it’s also not a free pass to avoid all your debts without sacrifices on your part. It’s sort of somewhere in the middle. You can stop your creditors from hounding you, and you can have a fresh start. But you need to remember that not all debts may be exempt from repayment.
When Can a Bankruptcy be Right for You?
In general, there are three basic situations when a bankruptcy can be the right choice:
Benefits of Bankruptcy
The main benefit you get when you file for bankruptcy is that your creditors are now forbidden from trying to collect money from you. They can’t repossess your home or car, and they can’t garnish your wages.
There are several types of bankruptcy, and each has its own benefits. Chapter 7 cancels most or even all of your debt, but you may have to give up a chunk of your property. Chapter 13, on the other hand, allows you to propose a payment plan for most or all of your debts over the next few years. With Chapter 7, most of your debt obligations may be erased, but with Chapter 13 you get to keep a lot of what you own.
Filing for bankruptcy doesn’t mean you’re a failure. It may mean that you failed this time, but next time you may succeed. After all, history is full of successful people who had a history of bankruptcy before they succeeded in life. Able Lincoln filed for bankruptcy years before he became a successful politician. Walt Disney filed for bankruptcy in 1920, but bounced back when he created Mickey Mouse in 1928. Henry Ford had two failed companies that led him to bankruptcy, but he eventually succeeded with the car company he founded. Donald Trump, Willie Nelson, Larry King, Toni Braxton, and Burt Reynolds all filed for bankruptcy, and they all managed to rise again. And so can you.