Being deep in debt to the point of even considering bankruptcy can be stressful, but before you go ahead and call your bankruptcy lawyer to start assembling paperwork for your case, you need to first determine if you qualify to file. There are five primary things you can do to see if you qualify for a Chapter 7 bankruptcy, they are:
1. Analyze Your Debt-to-Income Ratio
If you sit down and look over your finances only to realize that your total debt exceeds half your total annual income, you should consider sitting down again with a bankruptcy attorney to discuss your options.
2. Create a Recovery Strategy
If after looking realistically and strategically at every aspect of your finances, including how much debt you have, versus how much income you’re earning, you discover that even after taking extraordinary measures it would still take you longer than five years to pay everything off, you definitely need to find a reputable bankruptcy attorney to help you find a more acceptable path of recovery.
3. Consider Your Life Outside of Money
If you feel trapped every single day because of your debt, like you will never get out from under it, or your personal life has been significantly affected, you may need to consider bankruptcy as a form of relief. However, this is not to say that all monetary stress is cause for bankruptcy. A person should only ever seek legal intervention for debt in extreme circumstances, such as cases in which families are harassed non-stop by debt collectors, food is a rationed substance, and/or basic utilities are considered non-essential expenses.
4. Attempt to Save a Little Each Month
If after trying as hard as you can to save and moving things around you still have no disposable income whatsoever, you may need to come to terms with the fact that you have more money going out than coming in – and if you don’t get help soon you’re headed for trouble. Missing one payment or incurring one late fee can be bad enough, but if that’s all it takes to set you permanently behind you need to get help.
5. Compare Your Finances to the State
If you are living significantly below the median income level for your state, which in Michigan is $52,492 as of 2016, you may qualify to file for Chapter 7 bankruptcy.
If after taking these steps you’ve realized that you do not qualify to file for bankruptcy, we urge you to continue monitoring your debt-to-income ratio to stay informed of your ever-changing financial status, follow through with your recovery strategy to reduce your stress, try to enjoy your life without letting your fiscal troubles get in the way, keep saving as much as you can each month so you can avoid ever facing debt again, and consider how fortunate you are to have the means to climb out of your debt independently.
If, however, after taking all of these steps to get informed and recover from your debt you’ve discovered that you do indeed qualify to file for Chapter 7 bankruptcy, we encourage you to reach out to our reputable bankruptcy attorneys at Church and Korhonen, PC today. Call Church and Korhonen, PC, toll-free at 1.800.758.5611 or simply fill out the form in the sidebar to begin taking steps to a more sound financial future, greater peace of mind and a fresh start.