When is bankruptcy a good option?

UPDATED: Feb 21, 2012

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When is bankruptcy a good option?

I owe approximately $10,000 in medical bills, a consolidation loan, apartment move out costs, etc. I have a child but only a part-time waitressing job. I now live with my parents.

Asked on February 21, 2012 under Bankruptcy Law, Michigan


S.L,. Member, California Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

Bankruptcy is advisable when debts exceed assets.

Chapter 7 bankruptcy is straight liquidation which eliminates your debts.  Chapter 7 would be your preferred option and it would appear that you are eligible.  If you are not eligible for Chapter 7, filing Chapter 13 would be an alternative; however, Chapter 13 bankruptcy requires a plan (budget) for repayment of creditors.  It would be advisable to speak with a bankruptcy attorney. 


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