No one even wants to utter the words “bankruptcy” let alone visit your local bankruptcy attorney to start the proceedings. But there are times when making the decision to go through a bankruptcy can be actually smarter than trying to struggle through your current financial trouble. While we may read about famous people who struggle with a bankruptcy because it means they have to give up a famous bauble or let go of their pet tigers, for most of us the end result is relief.

So when does it make the most sense? Here are a few pointers that might tell you if you should be looking at it in your current situation.

• Credit Cards – If you are only making minimum payments on your credit cards and your debt is mounting sky high, this is a sign you should be considering it. If you use your credit card for the basics like food and still don’t pay it off, this is another sign.
• Bill Collectors – If you are constantly dodging calls from bill collectors you know you are in trouble.
• Financial Fear – If the very thought of working through all your financial woes to find out just how badly in debt you are fills you with fear, there is probably a good reason to consider bankruptcy.
• Debt Consolidation – If those ads are looking like a good idea you might want to look at bankruptcy instead.

Taking Stock of the Situation

If any two of the situations above sound familiar then you need to find someone who can help you assess your options. The first big step is to look at all of your assets and debts to see if there is any way you can negotiate a settlement. Banks will work with you on credit cards and sometimes businesses will negotiate a certain amount with you, but don’t count on it. You need a reality check first, to know if you owe more than you are worth. If you do, then looking at bankruptcy might be your best bet to get a fresh start.

Should I file Chapter 7 or Chapter 13

You should first know that thousands of people file for Chapter 7 bankruptcy each month in the U.S. It exists for a reason, to help those who get in over their heads find a way to start over financially. So don’t be ashamed, or feel like a failure. If you have something you own such as a home and you want to find a way to hold on to it after the bankruptcy, you might consider filing for Chapter 13. This is called a reorganization bankruptcy and will allow you a bit more leverage if you own property or a business.

Make the Decision

Whatever pathway you chose, make the choice while you still can. Some people wait until they are so badly in debt that they feel desperate. Know that there is always a way to walk away and start over. Talking it over with a counsellor that specializes in debt recovery may be a good first start. The sooner you admit you need help the faster you can get through it and start your new life debt free.

It is scary but it is certainly worth it!