If you are experiencing financial difficulty, have exhausted all other options, and are still in debt, you are probably asking yourself, “Should I file for bankruptcy?” Thankfully, a should I file for bankruptcy quiz is available that mirrors the actual bankruptcy forms and uses data to help you estimate qualification, costs, pros and cons, and alternatives to bankruptcy.
Here’s the link to my favorite Should I File Bankruptcy Quiz. This article has been updated in 2024. What I really like about this calculator is that it takes into consideration how much a lawyer can charge you for a Chapter 7 bankruptcy as well. It uses actual data from bankruptcy attorney fee dockets that are publicly available (but cost) on PACER.GOV.
The quiz has a bankruptcy qualification estimate and the estimated cost of filing for bankruptcy. It also compares Chapter 7 and 13 bankruptcies and discusses the advantages and disadvantages of filing for bankruptcy. You will also get a brief description of debt-relief options other than bankruptcy, like debt settlement. All the information is based on bankruptcy forms you must fill out when applying for bankruptcy.
Read through the quiz to decide if bankruptcy is the best option for you.
Understanding How the “Should I File Bankruptcy” Quiz Works
There is a lot to do once you file for bankruptcy. It is a lengthy process that involves heaps of paperwork, deadlines you need to meet, and other obligations. Analyzing all the paperwork, you need to fill out to file for bankruptcy might feel overwhelming. However, you can take this bankruptcy quiz. It considers all the qualifications you should meet in the paperwork.
The bankruptcy calculator considers your monthly income, expenses, debt obligations, and other financial information. After entering all the required details, the calculator will estimate what bankruptcy might be like for you. It will output the estimated costs, savings, and timelines.
Another common question is whether you’d be able to keep your house in a bankruptcy, and thankfully, you can find a bankruptcy exemptions quiz that helps you determine that on Ascend’s website.
Although the quiz will yield estimated results, it is a pretty accurate measure of what to expect, with some precise information. However, nothing is cast in stone, and some variables can affect your case.
What Is Included in The Bankruptcy Quiz?
There are two main things that our “Should You File Bankruptcy” Quiz focuses on- qualification and cost.
You need to be eligible to file for bankruptcy. For Chapter 7 bankruptcy, you need to meet some income factors. While the income limit you should meet varies depending on the state, it is mainly 1.5x the poverty line. So, if you make above 1.5 times the poverty line in your state, you might not be eligible to file.
Second, the cost of bankruptcy is a significant factor. Yes, you are filing for bankruptcy because you cannot meet your debt obligations and need a financial turnaround. However, filing for bankruptcy is not free. There are some costs you will need to meet—for example, court filing costs, attorney fees, etc. The expenses for filing for bankruptcy also vary according to state. So, check for the average cost of filing for bankruptcy in your state.
Is Bankruptcy the Best Alternative For You?
There are other debt-relief options available, so are you confident that filing bankruptcy is the best choice? Although deciding to file for bankruptcy is a decision you need to make while considering numerous factors, you need to analyze if it is the best option for you deeply. To help you decide, here are answers to common questions individuals considering filing for bankruptcy ask;
Is Filing for Bankruptcy Ever a Good Decision?
There is a lot of stigma associated with filing for bankruptcy. Therefore, most people find it hard to file. A common myth is that once you file for bankruptcy, you can never recover. Another widespread misunderstanding is that everyone will know you filed for bankruptcy.
Contrary to these popular misconceptions filing for bankruptcy could give you the fresh start you desire. It can help you get out of debt and regain control of your financial life. However, deciding if you should file for bankruptcy is a personal decision. Here are common reasons people file for bankruptcy.
Unmanageable Credit Card Debt:
As an adult, you can get a credit card that allows you to spend what you don’t have at hand. If misused, this convenience can become an addiction that keeps building up until you are dealing with overwhelming credit card debt. Often, people find they have spent more than they can pay off, and getting out of the heap of debt can be difficult. Fortunately, you can file for bankruptcy to get rid of credit card debt.
Medical Debt or Hardship:
The cost of medical services is high, and if you suffered an injury that resulted in lost wages and an extended hospital stay, you might have a mountain of debt. Loss of income due to a medical condition can make it harder to cater to this debt, and you might need to file for bankruptcy.
Unemployment:
How secure is your job? Nobody expects to be laid off, sacked, or their contract not renewed. Since no one expects unemployment, when it happens, staying afloat can be challenging, especially if you don’t have enough savings to use until you find the next job. So, you may have to file for bankruptcy with piling bills and debt obligations with no income.
Recent Divorce:
Maybe the divorce is finally getting you the peace of mind you have been craving. However, divorce is pretty expensive and could be hard on your finances. Besides paying attorney charges, court dues, and other legal fees, you might also need to divide your property by half. The divorce could also end with you paying alimony or child support. The financial strain from a recent divorce could push you to file for bankruptcy.
Loans and Mortgages:
You had worked out a repayment plan for the new car you got on loan or the new house you got a mortgage. However, since these loans take several years to repay, unexpected inconveniences like loss of income could affect your ability to continue making payments. Unfortunately, irrespective of the changes in your situation, the companies will hold you accountable for the debt and expect you to pay up. So, to eliminate the debt, you might need to file for bankruptcy.
There are so many reasons why people file for bankruptcy. The above reasons are the few common ones. Filing for bankruptcy for whatever reason is a good choice if you need help putting your debts behind you.
Why Is Bankruptcy A Legal Debt Relief Option?
When you file for bankruptcy, you regain financial stability and independence. Ignore the myth that bankruptcy is a bad thing. Like everything else, filing for bankruptcy too has some consequences. However, getting out of debt can give you peace of mind and a new, more mindful start to a fresh financial journey. So, if you are convinced that filing bankruptcy can help you, it is worth considering.
What to Avoid Before Filing Bankruptcy
If you are considering filing for bankruptcy, there is a list of don’ts you should be aware of like:
Transferring your assets to family members:
You want to increase the chances of getting your petition approved, and appearing broke seems like a good idea. So, you want to transfer your assets and other properties so that by the time the court does a background check, nothing is in your name. While you may be convinced you are smart enough and can get away with transferring assets, it could do more harm than good. Once the court finds out, you might get accused of bankruptcy fraud and end up in prison. A good policy is to be honest to the court. There are cases where you can legally retain ownership of your assets.
Adding more debt:
Since you will file for bankruptcy and have your debts forgiven, it is tempting to consider taking on more debt. However, it’s unwise since it could make you ineligible to file for bankruptcy. Additionally, your creditor might file for an exemption for the recent debt on your discharge. In most creditor-debtor agreements, you agree to repay the debt. So, taking a debt when you know you cannot repay it is a fraud, and the courts will not discharge recent debts.
Withdrawing money from your 401(k)
you have been saving for retirement and are afraid that the court will order you to repay your debts from your 401(k). So, you opt to withdraw the money and stash it elsewhere. If you have done proper research, you should know that retirement accounts remain protected in bankruptcy. Therefore, irrespective of your debt, you cannot be asked to repay your debts from your retirement savings.
Lying about your property
You should always be honest when filing bankruptcy forms. Having many assets and property doesn’t mean you will lose it all. While you consider lying a minor offense, the court could dismiss your case.
Is There a Debt Limit I Need to Meet Before Filing Chapter 7?
No. There is no minimum or maximum amount of debt you should have to file for bankruptcy. The main concern is your eligibility. Are you eligible to file for bankruptcy? If you are, your debt amount doesn’t matter.
What matters is, is bankruptcy the best alternative for you? Remember, there are other alternatives to bankruptcy that you should consider. Some are better if you have small debts, while others are better if your debt is large. Understanding all the options and weighing them to make a decision is essential.
Credit Counseling:
It is an ideal alternative to filing for bankruptcy if you have some money to pay off your creditors but need help organizing your debts. In debt management, you get help planning, budgeting, and organizing your debts. It is also effective for small debts.
Debt Settlement:
Debt settlement is a common alternative to bankruptcy.
If you want to take your chances and reduce the total debt you owe, try debt settlement. It aims at helping you negotiate your debt with your creditor in the hope that your creditor will take less than you owe and write off the debt. The debt settlement company will ask you to default your payments for a while before negotiating with the creditor. They will then offer the creditor a lump sum to eliminate the debt. If your creditor agrees, you will settle the debt for less than you owe. However, if they refuse, they might sue you. So, you need to work with a reputable debt settlement company and proceed with caution.
Debt Consolidation:
It is somewhat similar to debt management. In debt consolidation, you get to organize your debt. If you have different creditors you need to pay, debt consolidation bundles all your debts, making it easy to pay them off.
That said, you should consider the pros and cons of debt consolidation before pursuing that route. Debt consolidators often send mailers that state that you pre-qualify for the loans themselves. For example, Secure One Financial may have sent you a letter that you were pre-qualified for a loan,
Although our guide doesn’t exhaust all the debt-relief alternatives, you should consider these options before filing for bankruptcy. Information is power and will ensure you make the right decision. Depending on your debts and financial situation, you can decide whether to proceed and file for bankruptcy or not.
Take Away
Are you still undecided if you should proceed to file for bankruptcy? Go through our If y “Should I File For Bankruptcy” Quiz. There is enough information to help you understand if you need to file for bankruptcy and other options to explore. If you are still unsure, give us a call and consult one of our counselors