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How to know when to file for bankruptcy

| Sep 21, 2020 | Bankruptcy |

Though filing for bankruptcy here in Michigan is not uncommon, there is often a stigma attached to doing so. Many people see it as giving up or abandoning what they may have worked for. However, experts say that filing for bankruptcy may actually be the best solution for a person’s situation. Here is how to know when it may be time to file.

One of the first things to do is for a person to consider his or her future debt. This is true whether the person is considering filing for bankruptcy due to personal finances or for a business. If debt will simply be too high for the person to pay off in the future, any nonexempt assets he or she owns may end up being sold off in order to pay creditors. If that is the case, filing for bankruptcy might still result in the sale of those assets, but the costs of dealing with debt owed may be much lower.

Besides thinking about future debt, the person will want to think about future income or sales. If the person owns a business, it may simply be a time where sales have declined but will return, and bankruptcy may not be the best option. However, all of this will depend on how much risk the person thinks he or she can tolerate. It may be difficult to look at the smaller details of a person’s financial situation, but it is important since getting caught up in how the entire picture looks can be daunting and make a person hesitate.

In any case, it is a good idea for the person to involve both financial and legal professionals when deciding whether to file for bankruptcy. An attorney in particular can guide a person through the entire process and help him or her determine whether it makes financial sense to file for bankruptcy here in California. It can be a frightening prospect, but may also be the best solution for financial difficulties.

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