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Is Bankruptcy Worth It?

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In a Nutshell

Filing bankruptcy immediately protects you from your creditors but, it’s not right for every situation. Find out when filing bankruptcy may not be worth it.

Written by Upsolve Team.  
Updated July 22, 2020


Is Bankruptcy Worth It?

Filing bankruptcy will give you immediate protection from your creditors and provide long term relief by eliminatingyour credit card debt, medical debt, and most other unsecured debt. It will take a little bit of work and time, and probably just under $400 (for court filing fees and the mandatory credit counseling courses) to get to your discharge, which is typically not too much to pay in exchange for eliminating several thousand dollars worth of debts. Some debts, such as student loans, child support, alimony, and recent tax debts can’t be eliminated in a Chapter 7 bankruptcy. If most of your debt is in this category of non-dischargeable debts, filing bankruptcy may not be worth it because it will only minimally impact your day-to-day life. On the other hand, if you are subject to wage garnishment or have credit card companies and payday lenders constantly requesting payments you simply can’t afford to make, filing bankruptcy is often the most effective and efficient way to get permanent relief and start fresh. 

File Bankruptcy When Your Debts Outweigh Your Necessary Living Expenses

Before you file for bankruptcy, it’s important to weigh all your options. Although bankruptcy can relieve you from financial stress, it is not something that should be taken lightly. This is especially true because you can only get relief under Chapter 7 of the Bankruptcy Code every 8 years. If you file Chapter 7 even though you can pay at least some of your debts, you will not be able to seek the same relief if an accident, illness, loss of income, or other financial hardship arises in the near future. A good way to determine whether you need Chapter 7 relief is to compare your income with your necessary living expenses and your monthly minimum payments. If your monthly living expenses are higher than your income even without making the minimum payments on your unsecured debts, Chapter 7 bankruptcy is likely a good option for you. If, on the other hand, you have money left over after paying basic expenses and buying necessities such as food and household supplies, Chapter 7 bankruptcy may not be the right move for you at this time.  

What To Do Before Filing Bankruptcy?

Before filing for bankruptcy, here are a few things you should do: 

  • Take a Credit Counseling course. This usually costs around $25 to $50, however, if you are unable to pay for a Credit Counseling course, you may be able to get the fee waived. The course will give you an overview of your debt relief options in and out of bankruptcy. If possible, take the course from an approved provider in your state, so you can use it to satisfy the required pre-bankruptcy credit counseling class. You won’t have to decide right away whether to file bankruptcy; the certificate of completion you will receive will be good for 6 months.

  • Gather your financial documents, including your proof of income, bank statements, two years of taxes, lawsuit information for any cases filed against you, and a recent credit report. This will help you see the whole picture. 

  • Schedule a free consultation with a bankruptcy lawyer in your area. This will only cost you time but can help you better understand your debt relief options before making a final decision.

What To Expect After You Filed Chapter 7

As soon as your Chapter 7 bankruptcy is filed with the Bankruptcy Court, you will be protected from your creditors. The Bankruptcy Code provides for an automatic stay of all collection actions, so, everything from phone calls to wage garnishments has to stop. You will no longer have to deal with your creditors on an individual basis. Instead, you’ll have to work with the bankruptcy Trusteeassigned to your case by sending them any documents they may request in preparation for your creditors’ meeting. Once the creditors’ meeting has been concluded and assuming you have completed the second mandatory credit counseling course, the Court will grant your discharge.

Can’t Afford to File for Bankruptcy?

We get it, you’re already struggling financially, and paying for help with filing for bankruptcy may not be a realistic option right now. At Upsolve we are here to help. We’re a non-profit organization dedicated to helping low-income families get relief from debt by helping them file Chapter 7 bankruptcy without a lawyer. We do this free of charge for everyone who qualifiesfor our help. 



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Upsolve is a 501(c)(3) nonprofit that started in 2016. Our mission is to help low-income families who cannot afford lawyers file bankruptcy for free, using an online web app. Spun out of Harvard Law School, our team includes lawyers, engineers, and judges. We have world-class funders that include the U.S. government, former Google CEO Eric Schmidt, and leading foundations. It's one of the greatest civil rights injustices of our time that low-income families can’t access their basic rights when they can’t afford to pay for help. Combining direct services and advocacy, we’re fighting this injustice.

To learn more, read why we started Upsolve in 2016, our reviews from past users, and our press coverage from places like the New York Times and Wall Street Journal.

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