Bankruptcy - When is it a good choice?

Everybody has money woes to some extent, and filing for debt relief in court is clearly a solution that is best utilized as a last resort. A bankruptcy application stays on your credit report for many years, hurts your credit score and can make it tough to find work, a place to live or a favorable loan. A lot has been written about the new bankruptcy law and how it may affect consumers with money troubles. Bankruptcy is not something you ought to leap into, but with the changes in the law taking place recently, now would be a good time to examine your situation. Not much has been written about whether or not debt relief filing is a good idea and what standards might help a person make a choice regarding whether or not to file.

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Following are a few tips that may help you determine if this is a good move.

• You are writing checks without cash in your checking account to cover them - A returned check only adds to your misery as you may trigger fees from both your own financial institution and the recipient of the check. Individuals often write checks a couple of days before their paycheck arrives, hoping that the "float" will keep them out of hot water until the money gets added into their checking account. There are a number of problems with writing pesonal checks with no cash - recent computerized processing methods have reduced the time a personal check takes to clear and it's illegal. There really is no "float" anymore; checks clear almost instantly.

• You are making the minimum payments only on your bank cards - If you have a $10,000 or more outstanding balance and you've been paying $200 per month, it's going to double to four hundred. New laws ask the credit card lenders to have you pay back your balance in a "reasonable" amount of time which has resulted in a huge increase in required monthly payments. If you are merely paying the very least on a big outstanding balance you're in deep trouble.
• You have more than two major credit cards with existing financial obligations - If you have balances on more than two major charge cards, you are likely borrowing more than you can afford to repay. Bank card loans are a more affordable choice than quick cash loans, but are still not a good way to borrow money. Bank cards work ideally as a short term loan. Charge cards should not be a source of funds, as they represent a very costly way to borrow money. Credit cards are a useful tool and a way to buy something when you don't have the funds with you.
• You are making payments on one charge card by taking a cash advance on another - Taking a cash loan from Visa to pay your American Express bill is not an indicator of smart money policy. If you're borrowing cash from one card at 20% to pay another credit card at 20% and you're paying a cash advance fee too, you are almost certainly in a lot of trouble.

These are a few of the hints that you might be in enough money trouble to qualify for filing for debt relief do you qualify?