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A minor amount of debt is something most people deal with. Debt can even be a good thing if the debt is connected to the responsible repayment of a home or auto loan. Excessive personal debt, however, is not positive in any way. A person indebted to thousands upon thousands of dollars in secured and unsecured debt along with tax obligations has an unenviable task, paying off the debt. Paying the debt may prove impossible due to a personal financial situation.

Bankruptcy laws exist to help a person or business currently trapped in an inescapable cave of debt. Being awarded bankruptcy protection is something given with ease. A person must be a true candidate for protection in order for the bankruptcy courts to make a positive judgment.

More than Just Being in Debt

Owing money is not enjoyable, but the situation can often be dealt with. Someone who doesn’t want to deal with the budget-draining burden of paying high-interest credit card debt might be thinking about filing for bankruptcy. The situation, however, might not be dire enough to rise to the level of needing bankruptcy protection.

A number of factors need to be examined before choosing to seek bankruptcy protection. The impact of the debt takes on many forms that contribute to the various factors. Emotional strain and impact on the future are two of those factors.

If paying the debts off within a reasonable time period with a logical repayment plan is impossible, then maybe the debtor really is a candidate for bankruptcy.

Dire Consequences Loom

A debtor may be trying to avoid filing for bankruptcy, but the steps being taken to stay financially afloat might not be working. A car could be on the verge of being repossessed or dire non-payment of tax consequences may be looming. All of these matters are positively serious. Bankruptcy protection potentially brings forth a solution capable of averting personal ruin.

Debts Exceed Assets

Likely, the most basic of all criteria is debts end up exceeding — far exceeding — both past and future assets. A person with little or no net worth and whose future income prospects look limited is not exactly in a good position to pay off debts. With $10,000 in assets, $25,000 per year in income, and $75,000 in debt, debt that comes with an average interest rate of 19%, the debtor is not exactly poised to effectively address the situation without assistance.

Discussing the Situation

Speaking with a bankruptcy attorney could prove to be a very fruitful time investment. The attorney is sure to look over the situation and provide a reliable professional assessment. The attorney could even make suggestions for alternative strategies. Debt settlement, for example, might be far easier and less impacting thank bankruptcy. Yet, in certain situations, debt settlement might not be appropriate. A professional well-versed in counseling on bankruptcy matters can advise on the legitimacy of a client’s candidacy for bankruptcy.

Filing for bankruptcy may sound ominous, but doing so could be the very best decision a person makes. This is, of course, dependent upon how legitimate a candidate for bankruptcy the person is.