Is personal bankruptcy a good choice?

A personal bankruptcy application stays on your credit report for many years, hurts your FICO score and can make it difficult to find a job, an apartment or a competitive loan. Not much has been written about whether or not debt relief filing is a wise idea and what criteria might help a person make a decision regarding whether or not to file for bankruptcy. Plenty has been written about the recent bankruptcy law and how it might impact people with money problems. Everyone has a debt problem to some extent, and filing for debt relief in court is obviously an answer that is best used as a last resort. Bankruptcy is not something you ought to rush into, but with the changes in the bankruptcy law coming about recently, now would be a good time to assess your circumstances.

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Following are a few tips that might help you figure out if this is a good step for you.

• You are making payments on one charge card by taking a cash advance on another - If you're taking cash from one source at twenty percent to pay another at 20% and you're paying a cash loan fee too, you're probably in hot water. Taking a cash advance from Visa to pay your Mastercard bill isn't an indicator of wise fiscal living.
   

• You are writing personal checks without money in your account to cover them - People often write checks a few days before their paycheck arrives, hoping that the "float" will keep them out of trouble until the check gets deposited into their bank account. There really is no "float" anymore; checks clear almost immediately. There are some problems with writing personal checks with insufficient cash - new electronic processing methods have sped up the time a check takes to be paid and it's against the law. A bounced personal check merely adds to your misery as you may incur fees from both your own credit union or bank and the recipient of the check.
• You are paying the the very least payments only on your bank cards - If you have a $10,000 balance and you've been paying $200 per month, it is going to double to $400. New laws require the bank card issuers to have you pay back your balance in a "reasonable" amount of time which has resulted in a huge increase in minimum payments. If you're only paying the minimum on a big balance you're in deep trouble.

These are a couple of the hints that you may be in sufficient financial trouble to justify debt relief through the courts; do you qualify?