Bankruptcy is often considered a last resort and is ideal when all other options have been exhausted. Although bankruptcy may have a negative stigma, there are several times when it’s an ideal option and will work in the favor of the individual. For those considering the decision, there are several different times when it may be the best option.
1. You Receive Daily Calls from Collectors
When you receive calls from collectors on a daily basis, it can be difficult to resume with your responsibilities, activities, and relationships. The stress and emotional strain it has on your well-being can prove that it’s time to consider filing for bankruptcy.
2. You’re Underwater on Your Mortgage
If you see no way of catching up on your mortgage and are facing the possibility of foreclosure, bankruptcy can work in your favor by allowing you to negotiate loan modification and catch up on mortgage payments. You may also be able to avoid paying taxes on the canceled debt, as well as eliminate a second mortgage or home equity loan.
3. You’re Facing a Lawsuit
When debts go unpaid for extended periods of time, lenders are likely to file a lawsuit, which could can garnish your wages and and even place liens on your assets. If you’re headed to court, file for bankruptcy to halt all collection actions by creditors. You’ll also want to get legal help fromchapter 7 bankruptcy lawyers so you know what rights you have.
4. You Depend on Credit Cards for Survival
If you only make minimum payments on your credit card payments and you continue to depend on the credit cards for your survival, then it may be time to throw in the towel and file for either chapter 7 or chapter 13 bankruptcy. The situation will likely increase your financial risk if you’re unable to afford basic necessities.
5. You are Unable to Calculate How Much You Owe
For the average household, it can be easy to calculate how much is owed on auto loans, credit cards, student loans, and even the mortgage, but if you struggle to determine how long it will take to repay debt, then bankruptcy may be the best option.
Although it’s admirable to attempt to dig yourself out of debt over time, it can make the situation worse if you have already acquired too much debt. It’s crucial to consider filing for bankruptcy if you’re at risk of losing your home, assets, or facing a potential lawsuit to ensure that your financial future is protected.