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How do you know if bankruptcy is the right decision?

Escondido residents who are facing the most difficult of financial challenges will usually contemplate filing for bankruptcy at some point. But, for many people, knowing whether or not bankruptcy is the right option is hard, and they find themselves thinking: "I know bankruptcy helps people, but is it right for me?" Unfortunately, there is no easy answer to this question because every individual and family has a completely different set of circumstances. However, if you have begun to think that bankruptcy could be a legitimate option in your situation, there are a few things to think about.

First, you need to know how many options you have. Some people earn too much income to file for Chapter 7 bankruptcy, so they have to consider other personal bankruptcy options. But there may even be alternatives to bankruptcy as well, in which an individual or family with a steady income may be able to "tighten the belt" enough to begin paying down debt while taming down on expenditures.

However, if the decision to file for bankruptcy seems like the best option, it is imperative to know which types of debt will be discharged. Some types of debt, like student loan debt, are almost impossible to discharge in a bankruptcy filing. Other debts, however, like credit card debt, will most likely be included. A bankruptcy filing can have an impact on the filer's housing situation as well, as someone who has built up enough home equity in their residence may face the prospect of losing it.

The decision on whether or not to file for bankruptcy comes down to a personal decision that will have quite an impact on the filer's life. But, for many people, it is the best - or only - option that will lead to greater financial flexibility and freedom in the long run.

Source: FindLaw, "Is Bankruptcy a Good Idea for You?," accessed on Aug. 29, 2014

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