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When Should You File for Bankruptcy?

June 17, 2020

If the amount of debt you are facing is too much to bear, you might be wondering if you should file for bankruptcy. Most people will tell you that you should only file bankruptcy once you have exhausted all other alternatives, and it is your only remaining option. There are several things you need to consider before you make your decision to file for bankruptcy. While bankruptcy offers financial relief, it comes with serious consequences.

Should you file for bankruptcy? Continue reading to find out more.


There are a few reasons why filing for bankruptcy may be your best or only remaining option. If you have already contacted your creditors to work out a repayment plan, but they will not budge, that may be reason enough to file for bankruptcy. Additionally, if the money you owe each month is more than your monthly income, you may not have many other options than to declare bankruptcy.


When considering filing for bankruptcy, it is important to remember that it comes with a handful of adverse consequences. Even when it is the best option, you need to consider these negative impacts.

  • Loss of Assets and Property — Liquidation bankruptcy (Chapter 7) will require you to sell some of your assets and property (exempt property aside) to repay your debts. In Chapter 13 bankruptcy, as long as you can stick to your repayment plan, you can hold onto your assets.

  • Your Credit Takes a Hit — It is important to keep in mind that your credit score will take a serious hit when you file for bankruptcy. Moreover, bankruptcy will remain your credit reports for years to come. For example, Chapter 7 bankruptcy shows on reports for up to 10 years and seven years for Chapter 13. All of this makes getting loans with a reasonable interest rate nearly impossible and can hurt your chances of getting a credit card, job, or renting a place to live.

  • Impacted Self Esteem — While bankruptcy does not affect everyone mentally or emotionally, it can severely impact your psychological health.


The bottom line is that bankruptcy should not be taken lightly. Before you decide whether to file for bankruptcy, weigh your pros and cons, consider any other debt-relief options, and seek advice from a bankruptcy attorney. Overall, it is essential to remember that the problematic parts of bankruptcy are only temporary, and the relief it brings can put you on the right path to financial stability.


If you find that bankruptcy is your only option or are considering filing, call on Charles W. Daff, Bankruptcy Attorney. With over 43 years of experience in bankruptcy law, you can trust Charles W. Daff to navigate this overwhelming time and guide you through this legal process. If you reside in Orange County, Riverside County, San Bernardino County or Los Angeles County and are considering filing for bankruptcy, contact us today to schedule your free initial consultation.