7 Signs It’s Time to Consider Personal Bankruptcy

When struggling with debt, there comes a time when personal bankruptcy may be the best choice. The most well-known types are Chapter 7 and Chapter 13, but the former is most since it’s quick and simple.

Here are seven signs that it may be time to consider filing for pesonal bankruptcy.

1. You’re Constantly Paying Bills Late

A missed credit card payment isn’t something to panic over, but if you find yourself putting off payments to pay other things all the time, there’s a problem. Not only can paying bills late incur serious fees that make the debt even higher, but it also damages your credit score. This could mean a late credit card payment, delinquent medical bill, or student loan reported as being in default.

2. Assets and Income Versus Debt

A simple test to determine whether personal bankruptcy is right for you is to calculate whether your debts add up to more than half of your annual income. If the numbers don’t stack up in your favor, it’s unlikely you’ll be able to get a handle on the debt any time soon, and will continue to live paycheck to paycheck.

3. You’re In Multiple Types of Debt

While some people grapple with one major chunk of debt, such as credit cards or medical bills, if you have multiple types of debt that you’re trying to juggle, bankruptcy can provide relief. Trying to divert your financial resources in multiple directions is complicated, confusing, and often ineffective in the long run.

4. You Can’t Make Minimum Payments

Making payments late is one thing, but if you also can’t meet minimum payments, you’re only digging the hole you’re in deeper. If your income can’t keep up with the number of payments due each month, you need to reassess your financial situation.

5. Your Income Won’t Increase

Ideally, income increases with lifestyle expenses, but that’s rarely the reality today. For many people working a steady job, unless they receive a big raise, inheritance, or some other major financial game changer, chances are you’ll continue to grapple with debt with the same paycheck amount every month. If nothing is getting better and you’re not making headway, you’re stuck and something needs to be budge.

6. You’re Borrowing From Family

Chad Van Horn, “If you find yourself considering borrowing from family, it’s time to talk to a bankruptcy attorney. You should always know your bankruptcy options, even if you aren’t ready to file yet.”

7. You’ve Already Been Served with a Lawsuit 

This is the nightmare scenario that many people try to prevent by going to an attorney before things get too bad, but it’s only a matter of time before someone takes you to court to recoup their expenses. If this happens to you, get on the phone with a lawyer as soon as possible.

If your situation matches the conditions for Chapter 7 bankruptcy and you proceed, chances are you’ll succeed, and the debt will be discharged. In 2016, 95.5 percent of Chapter 7 cases brought before a court were approved, freeing the individual of the debt they owed. Once you have a full understanding of what the consequences will be and find a trustworthy attorney with whom to work, bankruptcy may be the best thing that ever happened to you.

Share
Published by
Chad Van Horn

Recent Posts

Simple Steps to Take When You’re Drowning in Debt: A Guide to Regaining Control

Debt can feel overwhelming, especially if it seems like you're drowning in bills, credit card…

1 week ago

Understanding Your Rights: Bankruptcy Laws and How to Deal with Debt Collection

When faced with overwhelming debt, it's essential to understand your legal rights and options. This…

2 weeks ago

How to Handle Aggressive Creditors: What You Need to Know to Protect Yourself

Dealing with aggressive creditors can feel like a never-ending source of stress, especially when they…

2 weeks ago

Recovering Emotionally and Financially After a Hurricane

Natural disasters like hurricanes don’t just destroy homes—they disrupt lives emotionally and financially. The road…

2 weeks ago

Navigating Contractor Bankruptcy: Challenges and Solutions

The construction industry is no stranger to financial turbulence, with contractors facing a growing threat…

2 months ago

Understanding the Sahm Rule: What It Means for Your Financial Security

What Is the Sahm Rule? Implications for Your Financial Stability | Van Horn Law Group

3 months ago