Many Americans spend every day thinking about how they are going to come up with enough money to pay their bills.
There are a lot of different types of debts, and there are many different creditors. Some people cannot pay their rent. Others cannot pay their student loan bills. Many are having trouble with mounting credit card debt, and others have unpaid medical bills. The creditors are calling multiple times a day, and they are wondering if they can or should declare bankruptcy.
The first thing in making a decision is to get away from the line of thinking that filing for bankruptcy is the mark of failure, because that is not true. There are a lot reasons people can get into financial trouble. Many people base their current purchases on their expected income. This is completely normal, but what happens when there is a drastic reduction in income that was not expected?
A family can be doing everything right financially and all is going well, when, all of a sudden, one spouse loses his or her job or becomes disabled. Even if one spouse is able to find a new job, they may go from making $60 per hour to making minimum wage, and there is no way they are going to be able to take care of their family and pay the current bills with this steep reduction in income. In this case, bankruptcy may be an option, depending on the situation.
In knowing when to file bankruptcy, one of the biggest fears that prevents people from making an informed decision is that the government will take away everything as soon as you file. There are many bankruptcy exemptions available to filers. In Pennsylvania, a person has the option to take the state exemptions or the federal exemptions.