When To File For Bankruptcy

Filing for bankruptcy is a decision that many people will have to face in their lives. It is a difficult prospect to face, but it is necessary for some. However, it needs to be carefully considered because it has negative effects on your credit as well as other negative ramifications.

It is important to look into any other alternative you can think of before deciding on bankruptcy. There are financial professionals and attorneys that can help you with alternatives. But, there are a few warning signs you can pay attention to in order to know if you are on the road to bankruptcy. 

If you are borrowing from one creditor to pay off another creditor you may be in a position to need the help of bankruptcy. A perfect example of this is when you take cash advances on credit cards to pay debts, or even pay routine living expenses. 

Another good sign that bankruptcy may be on your horizon is if you find yourself avoiding phone calls because most of your calls are not from creditors and lenders. They are persistent, and bankruptcy may be the only way to make them stop calling, and to relieve that stress from your life. 

Another sign that bankruptcy may be your last alternative is if creditors and lenders are threatening to sue you to reclaim their debts. Bankruptcy may be the only way to avoid court. 

If you have decided that bankruptcy is your best alternative, then you will need to decide which form of bankruptcy protection you will choose. Personal bankruptcy usually falls under chapter 7 and chapter 13. Chapter 7 bankruptcy allows you to clear your slate relatively quickly where you can start rebuilding your life. However, it requires you to liquidate assets to satisfy lenders. Chapter 13 is structured to allow you to make payments over the course of thee to five years. 

Even though it may seem that bankruptcy is your best alternative it is important to be completely sure there are no other alternatives for you. You can speak with a professional bankruptcy attorney or financial advisor to see if there are any other options for you like debt consolidation or maybe even just setting a household budget. Bankruptcy is a decision not to be taken lightly.


