Ewaniszyk Law Firm Serving California’s Legal Needs Since 1986

Should you choose bankruptcy or avoid it?

Bankruptcy is often associated with starting over completely and being financially ruined. The reality is that you don't actually lose everything in a bankruptcy, and it's a tool designed to help you get out of financial trouble.

While a bankruptcy is not the right choice for everyone, there are some people who can benefit from it. For instance, those with a high number of personal debts that are unsecured, like credit-card debts, a bankruptcy can help eliminate them and make it easier to live month to month. In comparison, someone struggling with student loans and past-due tax balances won't likely find bankruptcy to be much of a help in the long term, since it won't eliminate student loan debts or IRS collections except for in very specific circumstances.

If you can avoid bankruptcy, you should. If you can reduce your expenses, lower interest rates on your credit cards, sell items to make payments or increase your income, those could all be better options than going through bankruptcy. You could try a credit-counseling plan or consolidate your debts. You could even talk to your attorney about options that might be open to you in your specific situation.

If you do choose to go through bankruptcy, you'll be able to discharge some of your debts following the bankruptcy in most cases. Once your debts are discharged, you'll no longer have any obligation to them. For most people, a Chapter 7 bankruptcy is the fastest route to eliminate debts from their lives, so they can move on and have a more stable situation.

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