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When to think about filing for bankruptcy


There is a certain stigma associated with bankruptcy, often brought about by misconceptions and misunderstandings about the purpose of bankruptcy.  Every year hundreds of thousands of people file for bankruptcy in America.    Bankruptcy can be found in the US Constitution.  Its purpose is so an individual does not become so hindered and encumbered by their debt that they can no longer live a life of freedom or in the pursuit of happiness.  Everyone probably knows an individual who has filed for bankruptcy, but not everyone knows how bankruptcy has given millions of people their lives back.

That being said, when should a person consider filing for bankruptcy?  The most common reasons are unemployment or medical emergency.  However, bankruptcy can help with other situations.  Often times a divorce can ruin what was once a stable financial situation.  Bankruptcy can also stop foreclosure on a home, stop repossession of a car, eliminate legal judgments, stop wage garnishments, and stop IRS seizures.  Most importantly, bankruptcy should be able to eliminate most of your unsecured debt (think credit cards, but don't worry too much for the credit card companies-they are able to write off the bad debt as tax losses).

This is not to say that bankruptcy is a cure-all.  Bankruptcy does not eliminate your secured debt, such as first mortgages or other certain types of debt such as student loans.  Also, there are laws and procedures to prevent against abuses of the bankruptcy process, and any good attorney should warn you about this.  Also, not everyone qualifies for straight liquidation bankruptcy.  If you have to ability to pay your creditors, you should pay them at least a portion.  But bankruptcy is a very powerful legal tool which has helped millions of normal people get their lives back by solving their debt problems.

Visit or call (949) 735-8499 for more bankruptcy information.

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