When should a person consider filing for bankruptcy?

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When should a person consider filing for bankruptcy?

I am disabled and on disability for over 10 years now. I had a triple by-pass in 2005 and have bills from that surgery, plus others. I now have over $10,000 in debt. I cannot possibly pay on all of these and still live. Should Italk to a counselor or file bankruptcy?

Asked on February 22, 2011 under Bankruptcy Law, Arizona

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Bankruptcy will have profound effects on your credit rating, ability to get credit or loans or financing, etc. If you file chapter 7 bankruptcy, some of your assets (savings, property) may be sold to pay creditors; if you file chapter 13, you will have to live according to a bankruptcy plan for several years. Generally speaking, in most cases, it is probably not worth filing bankruptcy over $10k in debt, given these impacts. Also, it is possible that your income--disability--may  be excempt from being garnished or otherwise seized by creditors, so you may not need to file bankruptcy. All that said, you should consult with a bankruptcy attorney, who will be in a position to evaluate your situation and advice you. The cost of a consultation (and note: many attorneys will provide a free or reduced price initial consultation) will be worth it if it saves you from taking the wrong action.


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