Bankruptcy - Is it the right thing for you?

A personal bankruptcy filing stays on your credit report for many years, negatively affects your FICO score and can make it hard to find a job, a place to live or an affordable loan. A lot has been written about the recent bankruptcy law and how it will impact those with money problems. Everybody has money struggles to a certain extent, and filing for personal bankruptcy is clearly an answer that is best utilized as a last resort. Relatively little has been written about whether or not applying for bankruptcy is a good idea and what criteria might help someone make a decision in regards to whether or not to file. Debt relief in court is not something you ought to leap into, but with the changes in the debt relief law taking place recently, now would be a great time to analyze your circumstances.

Following are a couple of tips that may help you figure out if this is a wise step.

• You are writing pesonal checks without cash in your account to cover them - A returned personal check only adds to your trouble as you may trigger fees from both your own financial institution and the recipient of the check. There are a couple of problems with writing checks with insufficient cash - recent electronic processing systems have sped up the time a check takes to clear and it's a crime. People often write personal checks a few days before their paycheck arrives, hoping that the "float" will keep them out of trouble until the money gets credited into their checking account. There actually is no transaction time these days; checks clear almost instantly.

• You have more than two major charge cards with existing balances - Credit cards are a useful tool and a way to make a purchase when you do not have the funds at hand. If you have balances on more than two bank cards, you are probably borrowing more than you can afford to pay back. Credit card loans are a better choice than payday loans, but are still not a good way to borrow money. Credit cards shouldn't be a funding source, as they offer a quite expensive way to borrow money. Charge cards work well as a short-term loan.
• You are paying the lowest payments only on your charge cards - New laws urge the charge card companies to have you pay back your debt in a "reasonable" amount of time which has created a doubling of minimum payments. If you are only paying the minimum on a large balance you're in over your head. If you have a $10,000 balance and you've been paying two hundred dollars per month, it's likely to double to four hundred.
• You are paying the bill for one credit card account by taking a cash advance on another - Taking a cash advance from Visa to pay your American Express bill is not an indicator of sound money management. If you're borrowing money from one source at twenty percent to pay another charge card at 20% and you're paying a cash advance fee as well, you are more than likely in over your head.

These are a couple of the hints that you might be in sufficient financial trouble to justify filing for debt relief; do you meet the requirements?