Bankruptcy may be an ideal way to reduce or eliminate debts without necessarily giving up property such as a Pennsylvania home. It’s also worth noting that your credit score may also go up after filing depending on your circumstances prior to doing so. Let’s take a closer look at the clues that it is time to seek legal protection from your creditors.
Do you have any nonexempt assets?
If you don’t have any nonexempt assets, it may be possible to discharge your debts without losing property. Exempt assets generally include money inside of a retirement account, a portion of the equity in a home or car or any other items that you’ll need to maintain a reasonable standard of living. Of course, even if you have assets that might be eligible for seizure in your case, there is no guarantee that a trustee would actually take them.
Do you have any other path to become debt-free?
It may be in your best interest to file for bankruptcy if you can’t make more than the minimum payment on your debt. It may also be in your best interest to do so if your lenders won’t forgive or restructure your existing debt balances. As a general rule, you should also attempt to have debts discharged if you can’t afford to pay them off in five years.
Failing to stay current with your bills can result in your car being repossessed or your home being foreclosed upon. You may also incur late fees or other charges if you don’t make your payments on time. By filing for bankruptcy, you may be able to eliminate or restructure your debts at a lower interest rate. Bankruptcy may also allow you to seek a cramdown of assets that have negative equity.