How To Know When It's Time To File For Bankruptcy

Posted on: 8 February 2016

When you have trouble paying your mortgage or keeping up with your piles of bills, the topic of bankruptcy often comes up. While this can help you stop all of the calls from your creditors and get rid of some of your debt, it is also damaging to your credit and financial history. Here are some things to think about and ways to determine if it is time to file for bankruptcy.

You Can't Keep Up With Any Bills

While bankruptcy should definitely be considered a last resort, sometimes it is the only option when you are having trouble paying your bills. In many cases, the bills just keep piling up and because of your financial circumstances, you are barely able to pay any of them. Instead of tossing a coin to decide which one you will pay this month, it might be better to file for bankruptcy. Not all of your bills and debts will be taken care of through bankruptcy, so talk to a lawyer or bankruptcy expert to find out exactly what type of debt will qualify.

Your Creditors Won't Take a Deal

If you are lucky, you can contact your creditors and let them know your situation. If they know you having extreme financial difficulties, but still want to attempt to settle at least part of the debt, they might be able to work out other arrangements. They may be willing to reduce the total amount you owe as long as you pay the balance in full, or take smaller monthly payments until you get caught up with all your debts. If they are not wiling to work with you, it is a good sign that bankruptcy should be your next option.

You Are Losing Money to Garnishments

One thing many people aren't aware of is that the bankruptcy might allow you to stop wage garnishments. This only works if the garnishment is related to something other than government taxes owed or other debts that are not taken care of by bankruptcy. If your garnishments are from a creditor debt that will be released due to bankruptcy, this just might stop the garnishments once it is processed.

You Are Spending Your Retirement Money

If you have been saving up for retirement since you started working, and that account is running low because of having to pay all your debt, consider whether this is really worth it. Your credit might take a hit by filing for bankruptcy, but you can save your retirement funds and avoid the big penalties of withdrawing from the account early.

It is always a good idea to get help from a bankruptcy attorney, like William C Fithian III, before filing. They will help you understand the difference between different types of bankruptcy filing and help you get through the filing process.