Do I Need to File for Bankruptcy?

I want to talk about bankruptcy and when you should file for bankruptcy.

Most people really do not know their financial situation.  They have not made a budget or added up their credit card debt.  When they do, they are surprised.

So how do you know if you can actually pay off your credit card debt, or if you should file bankruptcy to get rid of the credit card debt?

I have used a simple formula through the years to determine whether someone should file for bankruptcy or not.  Here it is: If your total credit card debt is 25% of your total annual income, you are in major financial trouble. You may be able to pay off the credit card debt if you incur no more debt and really buckle down on your expenses.

Use the percentage calculator:

However, if your total credit card debt is 1/3 or more of your total annual income, I do not see any way that you will ever pay off your debt.  At this point, every spare penny you make is going to the minimum credit card payments. Every extra bill goes on a credit card.  The car needs tires—it goes on a credit card.  The refrigerator needs repairs—it goes on a credit card.

I do not see any way you can recover if your credit card debt us 1/3 or more of your total annual income.  Bankruptcy is not a matter of if, it is a matter of when.

I will be happy to personally walk through an analysis of whether you have too much debt and need to file bankruptcy.  Call me at (805) 446-6262 and we can talk about whether you need to file for bankruptcy or not.