Filing bankruptcy is generally a last resort, reserved for only the most dire of financial situations.  Typically, an individual files for bankruptcy only when all other alternatives have been exhausted.

When contemplating a bankruptcy filing, a thorough review of your financial situation must be undertaken.  Prepare a realistic budget, taking into account your monthly take-home pay and outstanding liabilities, including your house payment, car payment(s), utilities, food and groceries, healthcare expenditures, car maintenance, and gas.  When determining the amount of resources needed to allocate to each expenditure, be sure to reference past bills for accuracy reasons.

Once an accurate budget is prepared, you can gauge how much disposable income will be available to pay outstanding credit card and long-term debts.

Discretionary Income Available

If discretionary income is available, you should seek the help of a credit counseling agency.  A credit counselor will help to devise a plan in which to pay your credit card debt and long-term liabilities.  If your debts are exorbitant and cannot realistically be paid within 36-60 months, you should seriously consider filing bankruptcy.  For individuals in this situation, a Chapter 13 Bankruptcy filing would be the preferred method.  In a Chapter 13 filing, a plan is drafted in which your creditors are reimbursed based on a manageable, interest-free payment plan.

No Discretionary Income Available

If after budgeting, no discretionary income is available, one should consider filing a Chapter 7 bankruptcy.  In a Chapter 7 Bankruptcy filing, credit card and long term debt not secured by collateral is eliminated.

Reasons for Filing Bankruptcy

Reasons for filing bankruptcy are unique to each individual situation but can stem from unemployment, unexpected health/medical bills, divorce, or extraneous events beyond your control.


Finding the right attorney is one of the most important decisions you will make during your legal process.