California consumers who are struggling with debt might wonder when it is time to consider filing for bankruptcy. Some people may feel as though this is an outcome to be avoided at all costs, but this is not the case. There are situations in which filing for bankruptcy is the best decision.
When to consider filing
A few types of obligations, such as child support, cannot be discharged in a bankruptcy. However, many other types, including credit card and medical debt, can be. Bankruptcy may be the best choice for people who cannot pay off these types of debts over the next few years. In general, retirement funds are protected in a bankruptcy, so filing may be better than withdrawing a substantial amount of that money to pay off bills. Life after bankruptcy can provide the opportunity for financial stability that was not there before.
Types of bankruptcy
People who are considering filing for bankruptcy can do more research on the topic to find out whether they would be eligible for Chapter 7 or Chapter 13 bankruptcy. Eligibility is based in part on income. The former takes only a few months while the latter involves paying off some debt over a period of three to five years.
What to understand
There are still a few factors that keep people from filing for bankruptcy. One is worry about their credit score, but this is often already low before they file. Filing can give them the opportunity to start rebuilding it. Another reason is that people often feel ashamed of their debt or as though they are not behaving responsibly. However, the hardships that result in bankruptcy can happen to anyone, and filing can be the most responsible way of dealing with it. Filing for bankruptcy can help people move on from their debt and protect their future.