Contemplating bankruptcy could lead to numerous questions regarding the process, and this could prove to be quite overwhelming. Although the process is supposed to make it easier for you, most may find it stressful. One thing to always remember is that it is vital to seek legal counsel that will guide you through the process. Here are some of the things that your lawyer can go through with you to establish if this is your only plausible course of action.

Do you qualify for bankruptcy?

The trickiest part of filing for bankruptcy tends to be the process of qualification. The laws that have been stipulated on bankruptcy are supposed to ensure that you are not trying to evade paying your debts by hiding the money that you have. Some unscrupulous individuals will simply file for bankruptcy as a way of fleecing their lenders. However, there are also people who legitimately require financial assistance as they are drowning in debt. For this reason, there are strict requirements that are in place to ensure that only honest people who file for bankruptcy can qualify.

How do your debts and assets correlate?

The process of bankruptcy is best suited for individuals who are looking for complete elimination of their current debt. However, this may not be entirely possible depending on the income levels of different people. For instance, if you are living on minimum wage, you can easily prove your incapability at paying your debts, hence increasing your chances of qualifying for bankruptcy. Higher income earners would have to prove that their lifestyle cannot be supported by their wealth if they would like to qualify for this, hence making it harder for them. You also need to consider the fact that the type of debt that you are carrying will also affect the success of application. For example, you cannot expect to keep debts that are secure, such as a mortgage, or a car loan. Your lenders will require you to liquidate them so as to pay off your debt. On the other hand, if you have unsecured debts, you stand a better chance at success since these do not hold any assets in the form of collateral.

What will the effects of bankruptcy be on your credit?

One thing most people tend to forget is how filing for bankruptcy may reflect in the future on the individual's credit report. Although the process of filing for bankruptcy may not directly damage your immediate credit standing, it may, however, still affect future considerations for loans. A large number of lenders may choose to consider a debtor post-bankruptcy more of a risk than one who has never filed for it. This does not mean you may never get any credit. However, it does mean that you would have to prove your legitimacy more.