Though debt can help you acquire property or grow your business, it can also lead to stressful situations if you struggle to repay. What’s more, the amount you pay as interest depends on how long you take to repay your debt.
Therefore, if you have no money to repay your debts and are not ready to lose your assets to debt collectors, you might consider filing for bankruptcy. While bankruptcy may adversely affect your credit score, it can offer the debt relief you need to rebuild your finances.
So how do you know it is time to file for bankruptcy? Below are some signs to look for.
1. You Can’t Pay for Necessities Out of Pocket
If you have a very tight budget, you may not have enough money to pay for your necessities, meaning you can continue piling up more debt by using credit cards to make all your payments. If this cycle has no end, you should consider filing for bankruptcy, as you are increasing your debt daily.
2. You Have Experienced Some Misfortunes Making You Struggle Financially
Some people may think those who file for bankruptcy live beyond their means, but that is not always the case. Issues such as job loss, divorce, and illness can significantly eat into your income.
For example, if you have a medical condition that your insurance does not cover, you can spend a considerable chunk of your income on doctor consultations and medication, reducing the amount left for other necessary expenses. If the situation continues for several months, you may accumulate debts that you cannot afford to pay.
3. You Are Skipping Bills or Putting Off Debts
If you have no income or have too little, you may think of skipping your bills to have some money for other necessities like food. While this move may help you survive for a month or two, the need to do so indicates trouble.
For example, if you skip rent for several months, the property’s owner may evict you, leaving you homeless. Failure to repay debts on time leads to penalties.
4. Your Creditors Have Sued You
If you default on your loans, your creditors can file a lawsuit against you seeking power to garnish your wages or seize your assets. While you might win the lawsuit, the case signifies that the creditors are determined to get their money back.
If you file for bankruptcy, you can keep exempt assets, including your main vehicle, work tools, your home, retirement accounts, and burial plots.
5. You Get Loans at Obscenely High Interest Rates
If you have a lot of debt, financial institutions may deny you loans or charge you high interest rates due to the risk of default — a high debt-to-income ratio means that you may struggle to repay your loan because most of your income goes to debt repayments.
Therefore, consider filing for bankruptcy instead of taking loans at high interest rates to avoid aggravating your debt problem. Bankruptcy may help you reduce, restructure, or eliminate your debts.
If you are experiencing any of the above situations, you might feel overwhelmed or stressed. However, you can ease the pressure and have an opportunity to fix your financial situation if you file for bankruptcy. Due to the complexity of the filing process, hire an experienced bankruptcy attorney to ensure success.
At Wiesner & Frackowiak, LC, we have the experience and skills required to help you file for bankruptcy quickly to stop garnishments, repossessions, and foreclosures. Contact us today to see if we can help with your case and help you take control of your financial situation!