How To Decide Whether And When To File For Bankruptcy

• Seek Credit Counseling: Credit counselors might be able to negotiate with your creditors and devise a repayment plan with which you can live. Use an agency that is on the U.S. Trustee approved list so that if you do file for Chapter 7 bankruptcy, you will have completed the first step. See Chapter 7 Bankruptcy, Negotiating with Creditors and Using Credit Counselor Services.
• Consider New Uses of Assets: Have you considered debt consolidation using equity in your home? Do you have any life insurance, even term life? Do you have retirement plan assets? If the answer to any of these is yes, you might have access to funds that you didn't know about. See New Uses of Assets: Getting Cash From A Life Insurance Policy, New Uses of Assets: Getting Money Out Of Your Retirement Plan, and New Uses of Assets: Using Your Home to Get Cash.
• Speak With An Attorney: Speak with an attorney to see what other options you might have. An attorney can help you make out-of-court settlements with your creditors.
• Consider Doing Nothing: If you have little or no income or property, or if your only income is due to a disability (from a disability income policy or Social Security Disability Income) you might be "judgment proof." Basically, this means that you have nothing that creditors could take if they were to go to court. If you're judgment-proof, it might be best to simply do nothing. Except for very unusual situations, you can't be thrown in jail for not paying your debts.

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