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Determining when bankruptcy is the best option

| Oct 17, 2019 | Bankruptcy |

Bankruptcy is a tool that some Tennessee residents have used to get control of their finances. However, deciding to file for bankruptcy is never an easy decision. For example, some individuals may have over $20,000 in credit card debt along with a car loan and wonder if bankruptcy is the best option for them.

In some cases, filing for bankruptcy can mean a fresh start for someone and give them the ability to get back on their feet. The best thing that they should do is have a clear understanding of how much debt they owe, how much income they receive and how much they own in assets. Once a person has a clear grasp on these numbers, they can decide if paying off their debt is doable as opposed to filing for bankruptcy. If a person has $20,000 in credit card debt, paying off the debt is likely more doable for someone who makes $70,000 a year as opposed to someone who makes $30,000 a year.

Individuals who are considering debt settlement need to be extremely cautious. Since attorneys are usually not involved, these settlements are usually best for the creditor, not the debtor. The individual with the debt may be offered a better deal if they are represented by an attorney because the company will likely want to avoid the extra expense associated with litigation.

There are some advantages that come from filing for bankruptcy, including that a person can start saving money and will not have to pay taxes on debts that have been discharged. However, not everyone qualifies for bankruptcy. A person may wish to speak with a bankruptcy attorney to learn about the qualifications for filing. The attorney may be able to provide other information, including how to file the paperwork and when it needs to be done.