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In these tough economic times, lots of individuals and families are struggling to make ends meet. When the bills become overwhelming and family income simply isn’t providing enough to cover everything, many people start sacrificing some of the comforts they have grown accustomed to: maybe getting rid of the extra car or downsizing into a smaller house. Unfortunately, sometimes it simply isn’t possible to “downsize” enough and if that is the case, there may be legal options available.

I’m talking, of course, about filing for bankruptcy. While that may be an ugly word to some, the truth is, that bankruptcy may be the most responsible financial decision you can make when you are in over your head. It is a legal path to getting you back on the right track financially, while at the same time ensuring that all your creditors are dealt with fairly.

Bankruptcy is anything but a free-ride. Instead, it is a very complicated legal process that requires the filer to really get their finances in order. Depending on the type of bankruptcy used (yes, there are multiple types) this might involve eliminating some of their debt, while still holding them responsible for many other types of debt. Alternatively, it could just mean getting legal help to come-up with a full payment plan that your creditors have to respect. Even when the bankruptcy involves some debt relief, that comes with a cost in the form of losing certain types of personal property. In addition, filing for bankruptcy can carry with it some serious long-term consequences.

An understanding of the bankruptcy process and how it works to give an individual a fresh financial start reveals that it is a system designed to ensure individual responsibility. As a result, it is an extremely powerful legal tool. So while it’s not necessarily “ugly” or “wrong” to file for bankruptcy, it does deserve serious thought before moving forward with a bankruptcy filing. The courts and the law do some of this work by establishing specific criteria before someone is allowed to use bankruptcy.

But beyond meeting the minimum legal requirements for filing, it is a good idea to do a complete assessment of what your particular bankruptcy might look like and what non-bankruptcy alternatives might be available to you. In many cases, bankruptcy might be the option of last-resort when all other attempts have failed you. But that doesn’t mean it isn’t a worthwhile and financially responsible option.

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