At what point should bankruptcy be considered as an option?

[liveandchi]

I'm not at this point yet and I will do my best to avoid this at all possible, but I was just curious as to other people's thoughts on this subject. Do you think that bankruptcy should ever be considered as an option? At what point do you think a person should consider this option? If you could give some examples of time you think it is time to consider it, that would be helpful. I know that everyoneone will have a different opinion and there is no right or wrong answer since it depends on the person, but I would really like to know.

[crosses]

I can't imagine considering bankruptcy on my part, but then I have never been in really dire financial trouble. I think you know you are nearing the point when you view bankruptcy as a possible option. If you are seriously considering it, then you have reached a point where you are in major financial trouble.

[vendigirl]

I don't believe in bankruptcy without giving a real good try at dealing with the debt first. Only really extreme cases of debt should go into bankruptcy. For example, if a person's non-secured debt (ie: credit cards) is more than their annual income, bankruptcy may be the only option.
Another example of extreme debt would be someone I know who was in both personal and business debt. The interest and fees on money owed to Taxation and Revenue Canada were racking up to the tune of thousand of dollars a month. Those are the fees and interest alone! Revenue Canada was calling this person and threatening jail time for tax evasion. That definitely called for bankruptcy proceedings.

[glomax56]

I know some people think that if they file bankruptcy and have their debts discharged, nothing will be on their credit report except the bankruptcy. This is not true, every creditor still has the right to report the debt and most likely they will. I think the point at which bankruptcy is needed is when debtors are moving to garnish your wages, etc. The main thing bankruptcy does I think is get the creditors off your back if you are truly unable to repay the debts. Sometimes life just happens and you can't pay as agreed and that's where bankruptcy comes in. Chapter 7 bankruptcies will generally stay on your credit report for ten years from the date of discharge, and Chapter 13's for about seven years from the date of discharge, so it's wise to think through and make sure there are no other viable options. You're definitely not alone, many Americans are dealing with increased debt, job loss, catastrophic illnesses, etc. Good luck.

[liveandchi]

Thank you for your answers. I feel a little better knowing that I haven't reached that point yet even though all this debt seems to be weighing down on us. We've been doing our best to at least pay the minimum on all of the debts so that they don't go to collection. I hope we are able to avoid that happening.