Deciding whether or not to file bankruptcy is a huge decision as well as a very personal decision.  There are no set rules that say when an individual should file bankruptcy.  However, there are many different sources out there that can offer advice as to when it might be appropriate for an individual to file for bankruptcy.

According to http://www.bankrate.com/finance/money-guides/get-the-facts-on-bankruptcy.aspx, there are a number of things to consider if you are facing bankruptcy.  First, the debtor should see if they can solve their financial problems without bankruptcy.  Second, a debtor should not file until they have fixed the problem that has gotten them into their current financial situation.  For example, if a debtor is not going to have a clean slate 6 months from now then the debtor will just have a new set of bills and no bankruptcy options.  Third, a debtor should be aware of the ways to reduce the cost of filing for bankruptcy.  There are ways to cut the filing fees for bankruptcy.  Finally a debtor should know that bankruptcy doesn’t necessarily mean having to give up their car.  A debtor may be able to reaffirm their loan and keep their car.

According to http://consumer.abi.org/consumers/should-i-file-for-bankruptcy , some people find it helpful to file a bankruptcy case when they cannot pay their bills and they do not anticipate having the ability to pay their bills in the near future.  People also file because their financial situation is causing them emotional distress or depression, or because they would like to free themselves of debt now, if legally allowed, and have their income and assets to themselves in the future.

Finally, an individual should try to exhaust all other options before filing for bankruptcy.  According to http://money.usnews.com/money/personal-finance/articles/2009/04/21/should-you-file-for-bankruptcy.html, before an individual files for bankruptcy, they should consider whether or not they can work out their financial problems without filing for bankruptcy.  If an individual is unable to, then bankruptcy might be their best option.

Bankruptcy is a huge decision for a person in debt.  The question becomes for that person, when does filing for bankruptcy make sense?  According to http://www.investopedia.com/articles/pf/08/bankruptcy-filing.asp#12870097117542&close <http://mail.ssrl.com/exchweb/bin/redir.asp?URL=http://www.investopedia.com/articles/pf/08/bankruptcy-filing.asp%2312870097117542%26close> , there are a few circumstances in which filing for bankruptcy can be beneficial.  The first is if the debtor has already tried to negotiate with their creditor.  If a debtor has tried to negotiate with a creditor and they have not been successful, then a debtor might have no choice but to file for bankruptcy.  Second, if their liabilities exceed their assets, a debtor may have no choice.  The major reason that debtors file bankruptcy is because they cannot pay their debts.  The third reason that filing might be right is if a debtor is trying to keep their IRAs.  The federal bankruptcy laws shield a debtor’s retirement accounts.  A debtor might want to consider filing bankruptcy to protect these accounts.

Deciding whether to file bankruptcy or not is a personal decision.  According to http://consumer.abi.org/consumers/should-i-file-for-bankruptcy <http://mail.ssrl.com/exchweb/bin/redir.asp?URL=http://consumer.abi.org/consumers/should-i-file-for-bankruptcy> , some people find it helpful to file a bankruptcy case when they cannot pay their bills and they do not anticipate having the ability to pay their bills in the near future.  Other people file because their financial situation is causing them emotional distress or depression, or because they would like to free themselves of debt now, if legally allowed, and have their income and assets to themselves in the future.  Some people may find that bankruptcy is worth it even if they do lose some of their assets.

There are no set rules as to when a debtor should file for bankruptcy.  It is a personal decision and only the debtor truly knows if bankruptcy is right for them.  According to http://www.bankruptcyhq.com/bankruptcy-should-i-file <http://mail.ssrl.com/exchweb/bin/redir.asp?URL=http://www.bankruptcyhq.com/bankruptcy-should-i-file> , studies suggest that bankruptcy may be right for a debtor in any of the following scenarios: the debtor has a large number of dependents, the debtor is older in age, the debtor has a large amount of dischargeable debt, or the debtor has a small amount of savings and assets. These are all important things to consider in deciding whether to file for bankruptcy, but each debtor must weigh the pros and cons based on their individual circumstances.

Considering Bankruptcy?

Can I Choose The Type Of Bankruptcy I Want?

There is some degree of choice but there are limits.  The limitation of choice is based upon income.  If your income is below the median income for the same size household, you may have some power to choose either a chapter 7 or a chapter 13.  If your income is above the median you may have less power to choose and will probably have to file under chapter 13 if you file bankruptcy.  However, some people with income above the median may still file under chapter 7, if they have a sufficient level of the right types of debt and whose living expenses conform to those favored by Congress as per 11 USC §707(b)

What are the right types of debts and living expenses?

• Non-consumer debts which are greater than consumer debts
• Debts which are secured by your home, the higher they are the more likely you will have a choice
• Debts which are secured by two vehicles you own; the higher the  payments the more likelihood you will have a choice in bankruptcy
• Expense for mandatory payment of union dues as deductions from your paycheck.
• Expenses which are for  mandatory payroll deductions for retirement
• Expenses for non-real estate taxes (income taxes, Social Security taxes, Medicare taxes, self employment taxes)
• Expenses for  term life insurance insuring your life
• Expenses which are Court ordered such as child support or spousal support
• Expenses for education which are a condition of your employment
• Expenses for the education of a physically or mentally challenged dependent child where there is no available public education providing similar services
• Expenses for health care which exceed the standard deduction
• Expenses for reasonably necessary health insurance premiums, disability insurance premiums or monthly costs for a health savings account
• Expenses for care and support of an elderly, chronically ill or disabled household or family member who is unable to pay such expenses
• Expenses for home energy costs which are in excess of the standard amount allowed in the IRS local standards
• Document-able education expenses for a child under age 18 up to $137.50 per month per child.
• Expenses for continued charitable contributions which are in the form of cash or financial instruments