When you face financial hardship, many people do not know whether bankruptcy is the right option. And, it is agonizing deciding whether you should file for bankruptcy. Is filing for bankruptcy the right decision, and what factors should you consider before making a decision?
A bankruptcy quiz will help you decide whether to file bankruptcy or not. It estimates the bankruptcy qualification and how much it will cost to file bankruptcy. The bankruptcy quiz also compares the two common Chapters of bankruptcy: Chapter 7 and 13 and discusses the advantages and disadvantages of each.
You can also use the quiz to compare other debt-relief alternatives to bankruptcy, like debt settlement and debt management. The quiz is based on information asked on the bankruptcy forms you must fill out when applying for bankruptcy.
Our guide will explain everything you need to know about the bankruptcy quiz. What it is, how it works, and how to tell if bankruptcy is the right decision.
Should You File Bankruptcy?
Although filing for bankruptcy is a great way to eliminate debt, the filing process is lengthy and tedious. You will need to fill and file piles of paperwork. Going through the paperwork can be overwhelming, especially if you don’t have a lawyer to work with. So, you need to first identify if filing for bankruptcy is the right option for you before committing to a mound of paperwork and later changing your mind.
As financial experts who understand bankruptcy to the core, we have come up with a comprehensive quiz to help you decide. We considered the questions in bankruptcy paperwork and used them to create this quiz.
Our online calculator factors in information on your monthly income, expenses, and the current amount of debt you owe. Once you fill in this information, the calculator will process the information, and the output will help you understand if bankruptcy is the right option for you. You will have an estimated cost of filing for bankruptcy, estimated savings, and timelines.
The estimated results from our quiz will offer precise information. However, each case has unforeseen variables since every bankruptcy case is unique. Therefore, it remains an estimate but a more accurate one.
What Does the Bankruptcy Quiz Factor In?
There are two main factors that come to play when considering if bankruptcy is right for you- cost and qualification. Our bankruptcy quiz focuses on these two elements.
While the main aim of filing bankruptcy is because you are heavy on debt you cannot repay, filing for bankruptcy comes at a cost. There is a court filing fee, bankruptcy attorney costs, and trustee fees, which vary according to state. Therefore, we consider the different costs associated with filing for bankruptcy and the administrative expenses. Then, we give you an estimate of how much you might need to pay if you file your petition.
You need to qualify to file for Chapter 7 bankruptcy. Therefore, some income factors determine who can file for bankruptcy. These limits vary from state to state; however, it is mainly centered on 1.5 times the poverty line. So, if you make more than the mean income in your state, you might not be eligible to file for Chapter 7 bankruptcy.
These two factors will significantly influence your decision on whether you should file for bankruptcy. They also shed light on the benefits and potential drawbacks of filing for bankruptcy. Some bankruptcy quizzes may also provide estimates of what you may lose via bankruptcy exemptions.
Is Filing Bankruptcy The Right Decision?
Besides analyzing the costs and your eligibility, there is much more to consider before deciding if bankruptcy is right for you. Here are some questions you should ask yourself and honestly answer to know if you should file;
Is Filing Bankruptcy Ever a Good Decision?
There is some stigma associated with filing bankruptcy and a lot of myths going around. A common misconception is that everybody will know once you file for bankruptcy and that you can never recover from filing. These myths and misconceptions make people shy away from filing for bankruptcy, even when it is the right call.
Unlike popular opinion, sometimes, filing for bankruptcy is a great decision that yields a new start. Besides, you might get your debts forgiven and finally come from the mountain of debt you are currently dealing with. However, filing for bankruptcy is a personal decision, and the ball is always in your court.
Often, people file for bankruptcy because of;
Pay Day Loans
Unfortunately, with interest rates being so high, payday loans can be a factor when considering a pay day loan bankruptcy.
if you recently went through a divorce, you have experienced how taxing the process can be on the finances. Besides dividing your estate and other assets, you have had to pay administrative fees, court dues, attorney fees, and other hidden costs. Sometimes, the case may end up with you paying alimony or child support. No one gets into marriage anticipating a divorce, and the lack of planning in the event of a divorce could drain you financially. Sometimes, the better option is to file for bankruptcy to eliminate debt after divorce.
Debt Collection Calls
Debt collectors may be calling you several times a day. If you have 10 credit cards, this means you could be getting at least 20 different debt collection calls per day. While you can use an 11-word phrase to stop debt collectors, that does not mean that those debt collectors may try to sue you for as little as $500.
Can bankruptcy help?
As an adult, you can get a credit card and buy things you cannot afford and pay for them later. But what happens when you lose your source of income or your income is barely sufficient to cover your purchases for the month? Sometimes, the thrill of buying things on credit and repaying later gets out of hand, and before you know it, you are sinking into debt. Fortunately, filing for bankruptcy can help you get rid of overwhelming credit card debt.
A common cause people file for bankruptcy is medical debt. If you were involved in an accident or suffered from a terminal condition, you might lose many working hours, reducing your income. Any medical hardship that causes financial strain might push you to file for bankruptcy as the bills pile and income reduces.
Loans and Mortgages
It is hard to save until you get a lump sum enough to buy a vehicle you want or your dream home. So, the practical, effective, and easiest solution is to get a loan or a mortgage to finance the purchase and repay in installments. These loans might take some years to repay, and while you may currently be financially secure, situations could change over time. When you lose your source of income, keeping up with these repayments could be challenging and sometimes impossible.
You were thrilled to finally get a job you love and hoping to grow and get promoted someday. But somehow, the odds turn against you, and you lose your job, with upcoming bills to pay and debt repayment. Without emergency funds to meet your expenses and debt obligations before finding a new job, you can easily sink into debt.
There are endless reasons why people feel the need to file for bankruptcy. Each bankruptcy case is unique. Therefore, there is no specified right or wrong reason to consider bankruptcy. The main debate is: do you need help getting out of debt?
Why Filing for Bankruptcy Can Be A Good Thing
Although there are many stigmas about filing for bankruptcy, it is a good decision. When you file for bankruptcy, you can eliminate debt; and regain your financial stability and independence. Like anything else, filing for bankruptcy has consequences like a lower credit rating. Nevertheless, it can eliminate debt and give you a fresh start. So, if you think filing for bankruptcy can change the trajectory of your current financial situation for the better, look into it. However, you should go through several debt relief options to ensure it is the best choice.
Do I Have Enough Debt To File Chapter 7?
How much total debt do you owe? There is no minimum or maximum amount of debt. Therefore, you can file for bankruptcy under Chapter 7 for any amount of debt, provided you meet the income requirement. A bankruptcy quiz can also show you alternatives to bankruptcy.
Alternative Debt-Relief Options You Should Consider
When discussing why bankruptcy is a good call, we have suggested you consider other debt-relief options. Some options are cheaper than bankruptcy, and some work best depending on the amount of debt you owe or how behind you are with your repayments. Here are some alternative debt-relief options to bankruptcy that you should consider;
- Debt Management: if you have funds to channel towards repaying your debt, this could be the best option. Debt management focuses on creating a budget, a plan, and organizing how to repay your debts. However, it is best for small debts.
- Debt Settlement: It involves hiring a third-party, usually a debt settlement company, to negotiate with your creditors to pay off your debt for less than you owe. However, it is tricky since there is a likelihood you might get sued. So, you should work with a reliable and experienced debt settlement company.
- Debt Consolidation: If you owe money to different lenders, sometimes, it can be hard to keep up with all payments. Debt consolidation helps you organize your debt by bundling them into one payment.
Many other people consider Chapter 13 bankruptcy, and a Chapter 13 calculator can help you estimate the payment.
There are so many factors to consider before deciding to file for bankruptcy. Always do your research and hire a reliable financial expert for reliable advice.
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