How Do You Decide Whether to File Bankruptcy?

Law Office of Robert L. Firth Jan. 23, 2017

To make this decision well, accept that you need help, become well-informed about your options, then with good counsel make the best choice.

Accepting Reality

How can you make a good decision about something as personal and complicated as whether to file bankruptcy?

First, understand your options. This is mostly a task in which you use the rational part of your brain. You’re gathering information about your situation, thinking about problems that you’d like to solve, and then getting professional advice about your realistic options for solving those problems.

Second, weigh those options. You’re still using your rational brain, but now also adding intangible considerations like your gut feelings. Think broadly—consider your diverse needs and the needs of those for whom you are responsible. Listen to the opinions of competent people you trust, those who really have your best interests in mind. Then balance all that to make your best choice.

Before Starting, Accept the Hard but Freeing Reality

We human beings don’t like to admit we need help.

But consider the reality of this by honestly answering these questions:

  • Do you basically survive paycheck to paycheck?

  • Do you borrow from one debt to pay another?

  • Do you occasionally or even regularly use credit cards to pay for necessary living expenses for lack of cash or money in your checking account?

  • Are you spending a major portion of your paycheck on debt payments? Do you know how much each month you spend on them?

  • Do you put anything regularly into savings? Are you making progress on your savings goals?

  • Are you putting enough money away for your retirement? Have you taken money out of retirement funds to get by?

  • Have you needed to ask for financial help from family or friends?

  • Do you qualify for credit without a co-signer?

  • Do you ever buy things without telling your spouse or family?

  • Are you often overdue on your debt payments?

  • Have you used pawn shops, or sold jewelry or other valuables to come up with money for living expenses or to pay creditors?

  • Do you consistently pay only the minimum amounts on your credit cards, and hate to see how many years it’ll take to pay them off at your present rate?

  • Are you vague in your own mind about your total debt?

  • Have you lately gone through the embarrassment of having your credit card declined?

  • Have you been bouncing checks?

  • Are you receiving past-due bills, and are creditors calling?

  • Have you been denied new credit, or had your credit limit reduced?

  • Are you financially getting ahead or keep falling behind?

  • And if you are falling behind, is there a realistic reason for that to significantly change for the better soon?

Getting Help

Do your answers to these questions lead you to believe that you need to improve your life?

Once you dedicate yourself to changing your life for the better, you need a clear view of your options. Once you understand your options objectively you can make the very personal and nuanced decision that is right for you.

To understand your objective options and then wisely choose among them, you need the help of an experienced bankruptcy lawyer. There are two big reasons for this:

1. The law in this area is truly complicated. It is full of misconceptions, rules that seem to go against common sense, confusing blending of federal and state laws, differences between states and regions and even judges, and abrupt and unexpected shifts. Even when something seems straightforward, there can be crucial hidden considerations that could make a big difference. An experienced bankruptcy lawyer has spent years dealing day to day with all this. He or she knows all the layers of the relevant laws to be apply them to your situation and advise you accurately.

2. No matter how comparatively straightforward or complex your situation, it is unique because you are unique. A good bankruptcy lawyer will not just list your legal options, or tell you which to pick. You will understand your options as very personally applied to your unique situation. Your lawyer will make recommendations to you based on a thorough understanding of both the law AND your circumstances.


Start by confronting and accepting the reality that something needs to change. Then meet with a knowledgeable and compassionate lawyer so that you can rationally understand your options. Only then can you weigh those options through your own life experience and make a smart and wise decision.