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Telltale Signs It’s Time to File for Bankruptcy
Living in a state of debt has become the accepted way of life for many. Although bankruptcy has become far more common than it was decades ago, it still intimidates many Americans who are in a situation where filing may be best. You should consider filing bankruptcy when what you owe exceeds what you can pay. Here are some telltale signs it’s time to file for bankruptcy.
You are being sued
If a debt collector fails to reach you or receive payment, they then may file a lawsuit. If that lawsuit is successful, the debt will increase with the addition of court costs and attorney fees. A bankruptcy court issues an automatic stay against creditors, which immediately stops all lawsuits. Until your bankruptcy case is discharged or dismissed, creditors cannot take any additional collection actions against you, including lawsuits.
Your wages are being garnished
After a debt collector wins a lawsuit, they can attempt to collect what is owed. The laws according to your residential jurisdiction govern whether they will be able to freeze your bank account or garnish your wages. A court order for wage garnishment requires employers to withhold a certain amount of money from each paycheck until the debt is paid in full. If you file bankruptcy, the automatic stay would halt the garnishment. The automatic stay, however, will not stop domestic support obligations like child support or alimony.
You can’t pay your bills
Losing your job or sudden medical bills are examples of unexpected occurrences that have the potential to leave one in serious financial distress. Circumstances like these can lead to using credit cards to pay for routine living expenses and monthly bills, which can snowball very quickly. If your debt is increasing each month, or you just can’t make a dent in the debt, then it may be time to file for bankruptcy.
You risk losing your home to foreclosure
If foreclosure is a possibility, filing bankruptcy can allow you to get caught up or your mortgage and keep your home. Reinstatement, modification, short-sale, and deed-in-lieu of foreclosure, and open market sale are other options available to you. Often, however, filing for bankruptcy protection is the only legal means by which to stop a foreclosure auction.
When it’s time to file for bankruptcy
In some cases, it is possible to make your way out of debt with revised budgeting, hard work, sacrifice, and patience. Weigh the pros and cons and seek legal assistance.
If you are unsure, take the time to assess your situation. Do this by taking inventory of all your assets, including retirement funds, stocks, bonds, real estate, vehicles, savings, and any other non-bank account funds. Then total your bills and credit cards statements. You can then proceed accordingly knowing how much you truly owe and how much you can realistically pay. The following questions can help you assess if you need to act now:
- Are bill collectors constantly calling you?
- Do you make minimum credit card payments only?
- Are you considering debt consolidation?
- Is fear preventing you from sorting out your finances?
- Are you unsure of how much you actually owe?
Don’t be one of the many that wish they had filed bankruptcy sooner. A bankruptcy attorney can inform you of your options and assist you in obtaining a new financial start.
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