Bankruptcy is often perceived as one of those nasty four-letter words that we simply don’t say out loud. But the truth of the matter is that bankruptcy can provide relief in challenging times. It doesn’t have to be a bad thing, in fact, it might just be what you need to be able to breathe more freely again.
Understanding when to file bankruptcy can certainly be a challenge. There are many factors to consider before you take that step and file for Chapter 7 or Chapter 13 bankruptcy.
If you’re financially struggling and just can’t seem to make ends meet, we encourage you to contact a local bankruptcy lawyer. They can walk you through the process and help you weigh the pros and cons. We’re here to help you!
Assessing Your Financial Situation
First things first, we need to assess your financial situation to make a decision. Bankruptcy is bound to impact your finances in multiple ways.
If there is particular debt or obligation that is weighing you down, will bankruptcy proceedings eliminate this debt for you? Some debts are not dischargeable, take for example income tax debt.
We will use a consultation period to examine your overall financial situation. We will cover income, expenses, and property. We will then take that information and assess just how a bankruptcy filing might impact your financial situation.
Ultimately, we want to find the best debt relief option to achieve the results you need with the least amount of negative consequences.
Here are a few of the key points we consider when assessing your financial situation.
- Do you expect to incur more debt in the near future? (medical, home repair, etc.)
- Do you qualify for Chapter 7 or Chapter 13 filing?
- Do your debts of concern fall into categories that cannot be discharged? (child support, alimony, income tax, student loans, etc.)
- Are there risks to losing your property (such as a residence)?
- How long have you lived in your current state and will you be moving soon?
- Are you at risk for garnishments, foreclosure, repossession, or lawsuit?
- Could you potentially be receiving assets or resources soon (inheritance, bonus, raise, etc.)?
- Have you made any substantial payments recently?
- Have you taken recent cash advances or made extravagant purchases?
- Have you sold or transferred property for less than market value?
- Have you made a new vehicle purchase in the last 910 days?
- What are your options overall for debt-relief? Does something make more sense than bankruptcy?
These are the most common factors to consider but your situation could lead to other questions as well. We take all necessary factors into consideration.
Knowing When to File Bankruptcy
There are times that bankruptcy is the clearest option for the parties involved. In some situations, bankruptcy is the solution to eliminate debt while also protecting property while at times, bankruptcy is the solution to prevent additional debt problems.
Here are some signs that may help you understand when it’s time to file bankruptcy.
- You are using credit cards to pay living expenses like utilities, groceries, and fuel.
- After you pay your debts with your paychecks, you have nothing left for living expenses.
- You’re being harassed or threatened by creditors.
- You’re concerned about garnishments, tax levies, or repossession.
- You’re facing a debt collection lawsuit or have an impending debt collection lawsuit.
- You’re without a job or steady income.
- You’ve been diagnosed with a disability.
- You’re living off of retirement money for everyday expenses.
- You’re considering borrowing money to repay debts.
- You have substantial debts you are unable to pay.
This list is not an exact science of when you should file bankruptcy but rather topics to consider if you are facing any number of these points.
Be sure to seek the help of an experienced bankruptcy attorney today.