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Debtors benefit by filing for bankruptcy early

Virginia residents who are thinking about filing for bankruptcy are generally better off doing so sooner rather than later. By waiting to file, it could result in asset depletion or other problems that make it harder to truly get a fresh start. In some cases, individuals wait months or years before they ask for protection from creditors. By the time they avoid buying food to prevent bankruptcy, they are in what is called the "sweatbox."

Those who stay in the sweatbox for two years or longer are known as long strugglers. They are more likely to face lawsuits from creditors and have a median debt-to-income ratio that is 40 percent higher than others who have debt. This was according to research from the Consumer Bankruptcy Project. Many people choose to delay filing for bankruptcy because of the stigma attached to doing so.

However, those who are going into debt to pay off their current debt are prime candidates to file for bankruptcy. The same is true of those who have a debt-to-income ratio of more than 40 percent. Another sign that a person should file for bankruptcy is that he or she has stopped buying food or other essentials. Anyone who has debts that can be discharged in bankruptcy should strongly consider filing. As a general rule, credit card, medical and payday loan debts can be erased in either a Chapter 7 or Chapter 13 case.

Filing for bankruptcy may allow an individual to find relief from overwhelming debt. An attorney may be able to explain in more detail if a person's debts can be discharged and how that happens. An individual might also learn more about the benefits of filing for bankruptcy protection such as a stay from creditor collection actions.

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