When Is It Time for You to Declare Bankruptcy?

Going through financial hardships can be one of the most frustrating and frightening times in a person's life. One of the options that people have to save as much of their financial life as possible is to file for bankruptcy. However, bankruptcy comes with consequences, so just like anything else in life, filing for bankruptcy must be planned and timed carefully. There are a number of factors that must be taken into consideration before meeting with an attorney and filing official papers. To learn more about these factors, read on to learn when you should begin to declare bankruptcy. After a Mortgage Renegotiation Attempt One of the ways people attempt to save their homes from being foreclosed on is to file for bankruptcy. Although this is certainly a good route to take, it is always recommended for you to first attempt to renegotiate your mortgage with your lender. This is because once you have filed for bankruptcy, your lender is likely not going to want or be able to negotiate your mortgage. After You Have Met With a Bankruptcy Attorney Although you can technically file for bankruptcy on your own, it is never advised to do so. No matter the type of bankruptcy you are planning to file, it can be extremely difficult to go through the process alone. That is why you should always consult a bankruptcy attorney first before declaring bankruptcy. Before Promotions and Other Income Increases If you are expecting a promotion at work or simply expecting to come into some additional money soon, it is important for you to file for bankruptcy before that occurs. That is because the courts are going to use what is called a "means test." This is basically a look into your current income, which will then be used to determine the type of bankruptcy you are allowed to file. If your income is too high, you may only be allowed to file for Chapter 13 bankruptcy. This type of bankruptcy wipes out only a certain amount of your debts, and the courts will demand that you pay a portion of it back. After New Debts Are you expecting new debts to come in? Things such as an upcoming medical surgery should be taken into consideration. If this is the case, you may want to wait until they have settled before you file for bankruptcy. This is because bankruptcy, such as chapter 7, only allows you to wipe out debts that were present when you began to file your papers. As you can see from the information above, there are a number of factors that you should consider before filing for bankruptcy. If you are unsure of your current state of financial affairs, it is important to communicate with your attorney as they may be able to provide you with the best possible route for you to take.