Bankruptcy is such an ominous word, people tend to avoid or ignore it altogether. All of us are familiar with horror stories of solvent giant companies that turn belly up. Bankruptcy seems to run a list from the corporate world to something that is personal.

Nowadays, one of the normal norms of life is living in debt. Our economy clutters our lives with credit cards. Yet, how to tell when it’s time to file for bankruptcy?

Do you live this way?

  • Are bill collectors hounding you from work to your home?
  • You have no idea at all how much you owe?
  • Do your credit cards only show minimum payments?
  • Do you want a debt tie up?
  • Are you scared at the thought of sitting down to sort out your finances?
  • Are credit cards used even for your basic necessities?


It’s time to give more thought to the state of your finances if two or more questions get a yes answer from you. Bankruptcy, explained simply, is a situation where your debt is more than you can afford to pay.


Personal financial assessment


An inventory of all liquid assets can help you determine your financial standing. Assets that need to be included in the inventory include:

  • Bonds
  • Retirement funds
  • Cars
  • Stocks
  • Non-bank accounts
  • College savings accounts
  • Real estate

Give a rough estimate for each of your listed assets. Then, be brave enough to collect all your credit statements and bills and add them all up.

Filing for bankruptcy can be a life-saving strategy if you find that you owe more than the value of your assets. Yet, declaring bankruptcy is easier said than done. A debt that has spiralled out of control is not easily and simply solved by bankruptcy.

Two ways and two kinds of declaring bankruptcy

There are two main ways to become bankrupt. Voluntarily filing for bankruptcy is the most common route. Creditors asking the court to force a person to file for bankruptcy are the other way.

There are two types of bankruptcy as well.

Chapter 7 type of bankruptcy

Chapter 7 type of bankruptcy is filed by people for a lot of reasons. Some of the ordinary reasons for filing this type of bankruptcy include:

  • Marital issues
  • Unemployment
  • Overextended credit
  • Big medical bills

Known as the “straight bankruptcy”, filing for Chapter 7 bankruptcy will pay off as much of your debt by liquidating your assets. A notice of discharge will be sent to you within a period of four months. However, it will be 10 years before Chapter 7 can be expunged from your credit record.

Yet, wanting a fresh start quickly is resolved by Chapter 7 bankruptcy. However, it may not be the best option when you want to keep personal assets such as a home.

Chapter 13 type of bankruptcy

Known as the “reorganization bankruptcy”, Chapter 13 allows people to keep their properties. It also allows people with fixed annual incomes a grace period from 3 to 5 years to pay off all their debts.


It’s hard to admit that you are deep in debt and need a lifeline to get out of it. Filing for bankruptcy is not exactly the end of the world. If you need help with bankruptcy options,  get professional help when you feel it’s the right time. We are ready to extend a lifeline.