Filing for bankruptcy is a financial decision that could have an impact on your household for several years. It is because of this, it is important that you assess your financial situation and determine if filing is the right move for you. If you are thinking of filing for bankruptcy, here are some considerations you need to make. 

Are Your Debts Unsecured?

Unsecured debts, such as medical bills and credit cards, are typically discharged in a bankruptcy. In other words, you are no longer responsible for repaying your creditor. If a majority of your debts are considered unsecured, filing for bankruptcy can help you get out of a financial hole. 

However, if the larger share of your debts are considered to be non-dischargeable, filing for bankruptcy might not provide much financial relief. Non-dischargeable debts are those which are disallowed from being discharged through the bankruptcy code. Debts, such as student loans, alimony, and child support, are included. 

Will Exemptions Protect Your Property?

When you file for bankruptcy, your assets could be liquidated by the court. In essence, the bankruptcy court can take some of your assets, sell them, and pay your creditors with the proceeds. Your assets can include your home and car. 

You do have some protection from the bankruptcy court though. Each state has exemptions that can be used to protect some or all of your assets. An exemption allows you to retain possession of assets that total to a certain amount. The amount varies by state. 

Before filing, check your state's exemptions to determine if your assets will be protected. If not, your attorney can help you explore strategies you can use to possibly retain your possessions. 

Do You Have Co-Signers?

If you have any debts, such as your home or car, that were purchased with the help of a co-signer, filing for bankruptcy could shift the burden of the debt from you to the co-signer. 

When you file for bankruptcy and your obligation to the debt is removed, the creditor has the right to go after your co-signer for the balance of the credit account. Unless he or she also files for bankruptcy, the debt will have to be paid or the co-signer could face legal action, such as a lawsuit. 

If you do have a co-signer, you can choose to wait to file for bankruptcy until the debt is paid off or you can still file and continue to pay off the debt to protect your co-signer from the creditor. 

There are other considerations you should make before filing. Consult with a bankruptcy attorney to fully explore your financial situation and options. To learn more, speak with someone like Dunnigan & Messier P.C.