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How do you know when you should file for bankruptcy?

On Behalf of | Feb 21, 2020 | Firm News

Most Americans struggle with debt. Whether it’s from medical bills or credit card debt, getting behind on payments can be an overwhelming and stressful experience. But what can be even more daunting is the prospect of having to file for bankruptcy.

However, just because you have a considerable amount of debt doesn’t mean your only option is bankruptcy. And conversely, just because you have to file for bankruptcy doesn’t mean you’ve failed in any way. Rather, bankruptcy is an option that can help you regain financial stability and start fresh.

Is bankruptcy the right step for you?

If you are drowning in debt but aren’t sure whether it’s time to file for bankruptcy, asking yourself these questions might help you figure out if the time is right:

  • Are debt collectors starting to call? It’s not uncommon to fall behind on payments from time to time. But once you start receiving calls from debt collectors, it’s usually an indication that you can no longer keep up with your repayment schedule. In serious cases, debt collectors may even begin filing lawsuits against you.
  • Is your home in danger of foreclosure? It can be scary to face the prospect of losing your home. But contrary to popular belief, filing for bankruptcy does not mean you will lose all your possessions — your home included. In fact, filing for bankruptcy may help you keep your home on top of paying off your debts.
  • Are you using borrowed money to pay off your debts? When you find yourself using loans to pay off your debts, this habit will only exacerbate your situation. Another sign that you may need to file for bankruptcy is when you begin using credit cards to pay off other credit card bills.

Bankruptcy can help you start fresh

If you answered yes to any of the above questions, bankruptcy might be the right option for you. And while filing for bankruptcy is no easy task, it can ultimately help you move towards a more secure future.

There are two main types of bankruptcy that you may be eligible for — Chapter 7 and Chapter 13. Consulting with an experienced bankruptcy attorney can be a beneficial first step. They can help you determine which option is the best fit for your financial needs.