Knowing when you need to file a bankruptcy is tough. Even if you’ve spent months or even years trying to make things work out, you may still be unsure about taking that last step. Please know that you’re not alone. I see clients every day who have waged this same battle with themselves.

Use the following questions to evaluate whether you may be in need of bankruptcy relief:

1) Are you able to pay all of your debts in a timely manner? If so, you are not in need of bankruptcy relief.

2) Are you only able to pay some of your debts in a timely manner? Let’s discuss this briefly. If this is the case, ask yourself which debts you are paying. If you are able to pay your mortgage payment and your car payments, but are unable to make payments towards your credit cards, lines of credit, doctors, or other debts, you may want to consider bankruptcy. This is because assets like vehicles and your home can be kept, in certain situations, even after filing bankruptcy. Whether or not they can be kept will depend on the amount of equity in them and your state’s bankruptcy exemptions. If you are going to file in Nevada, so long as your home has less than $550,000 in equity and your vehicles (one for each spouse, or just one for a single filer) have less than $15,000 in equity in each of them, you may keep them. Therefore, you may be able to keep your house and cars and keep paying on them after bankruptcy, but your other debts won’t disappear without some assistance from the bankruptcy code. If you’re in a situation where you feel like you’re unable to pay your debts, save for your home and cars, you may want to consult with an attorney to decide if bankruptcy will help your situation.

3) Have your creditors sued you? If so, you need to be aware that they will be able to obtain a judgment against you, which they will likely be able to collect upon by way of a wage garnishment or a property lien. They can take up to 25% of your paycheck. This may become burdensome to you. In most cases, a bankruptcy will discharge your responsibility under those judgments and extinguish any lien or garnishment. Bankruptcy may be the only way you have to rid yourself of a burdensome judgment.

4) Have you had a home or car repossessed, or is your home currently in the process of foreclosure? If so, a bankruptcy could help you discharge any liability you have on a deficiency that remains outstanding to an past or present mortgage holder or lender. It may also postpone a current foreclosure sale, giving you time to plan for your family.

If your answer to any of these questions indicate that bankruptcy relief might help your situation, please contact me today and schedule a free bankruptcy consultation.