The decision to file bankruptcy is never easy. While it should be a strictly financial one, emotions always come into play. We all always hope that everything will work out for the best. We do everything in our power to avoid bankruptcy. How do you know when to consider filing? To bankruptcy attorneys, there are some clear signs that a client needs our help:
- When you are struggling or no longer can make minimum payments on credit cards. Credit card debt is the easiest type of debt to erase in a bankruptcy.
- If you have tried debt consolidation and cannot meet the payment obligations.
- When you are considering taking on new debt, such as personal loans, to pay off old debt. This, unfortunately, is usually the financial equivalent of rearranging the deck chairs on the Titanic.
- When you are considering or already tapping retirement funds to pay your bills. The bankruptcy court cannot seize retirement funds to pay creditors, so these funds would be protected if you file bankruptcy.
- If you are facing foreclosure, repossession or wage garnishment.
There are some situations where bankruptcy may not be your best option. A bankruptcy may not help if:
- The bulk of your debt is student loans, spousal or child support, or recent (less than three years ago) unpaid taxes.
- If you have significant equity in your home but are unable to pay your mortgage at its current rate.
- You have filed bankruptcy previously. Depending on the types of bankruptcies filed and the timing, you may not be eligible to have your debts discharged.
A bankruptcy attorney will be able to review your finances with you and determine if bankruptcy is right for you.