Nine Signs That it is Time to File for Bankruptcy

Facing a large amount of debt often feels overwhelming. Beside uncertainty about how you will make your monthly payments, it is also common to feel uncertain about what your future holds. While many people think that bankruptcy can help, they are afraid of undergoing the process when they are not sure if it is the best solution. The following are nine common signs that it is time to pursue bankruptcy.

# 1 – The Advantages of Bankruptcy Outweigh the Drawbacks

Many people hesitate to file for bankruptcy because they are worried about various undesirable consequences. Some of these drawbacks include that your bankruptcy will be public record that can be accessed by almost anyone. Additionally, filing fees often amount to several hundred dollars. People can also expect to have more difficulty obtaining secured credit if details of a bankruptcy appear on their credit report. 

While these challenges might feel insurmountable, they pale when compared to the difficulties inherent in continuing on while drowning in debt. If the debt you owe increases daily and you can no longer make your required payments, the resulting financial strain will soon become unbearable. If you find yourself at this point, the advantages of bankruptcy can greatly outweigh the downsides.

# 2 – It Would Take Two Years or Longer to Pay Off Your Debts

One helpful way to determine if bankruptcy is a good option is to decide whether you will be able to pay off all of your creditors within two years. If it would take longer than this to pay off the entirety of your debts, consider bankruptcy. Rather than go through the next two years unable to fully meet your debts, bankruptcy can provide you with an opportunity to take control of your credit now. 

# 3 – Financial Stress Makes it Hard to Sleep

Based on a report provided by CreditCards.com, approximately two-thirds of Americans lose sleep each week due to financial concerns. While mere difficulty falling asleep will not end up disrupting your ability to function, prolonged bouts of insomnia can impact your mental and physical health. If you are at a point where you are so worried about your debts that you cannot sleep, you should consider filing for bankruptcy. While bankruptcy can be uncomfortable at first, it is often the first step toward rebuilding financial health and a good night’s sleep.

# 4 – Creditors Refuse a Settlement

Some creditors appreciate that debtors sometimes face financial hardship, and they are willing to negotiate settlement amounts that are less than the original debt. Other creditors, however, simply will not settle and will not take a penny less than what they believe they are owed. If you are not able to repay debts to a creditor and the creditor is unwilling to reach a settlement agreement, it might be time to consider filing for bankruptcy. 

# 5 – The Quality of Your Work Has Declined

Losing your job while struggling with debt can make a difficult situation even more challenging to navigate. Even if you have a job, sometimes the heavy stress of mounting debt impacts the quality of your work performance. Many people report that it is difficult to focus on their work when they are worried about how much money they owe. If growing debts have begun to interfere with your work product, you should give serious thought to filing for bankruptcy.

# 6 – You are Being Harassed by Creditors

One of the most challenging parts of owing debt is the constant emails, letters, and phone calls from creditors. Various laws under the Fair Debt Collection Practices are designed to prohibit some undesirable collection actions. For example, debtors can only call between 8 am and 9 pm. If you want this harassment to change, bankruptcy can help. The Fair Debt Collection Practice similarly prohibits creditors from contacting you after you have received a bankruptcy discharge. 

# 7 – Your Debt Outweighs Your Income and Assets

One easy way to decide whether it is a good idea to file for bankruptcy is to compare the debt that you currently owe against your income and assets. In some cases, the amount of debt that a person owns seems small, but it is highly burdensome when compared to that individual’s assets and income. If the totality of your existing debt is more than half of your existing income, it is unlikely that you will ever be able to pay off your debt. Consider filing bankruptcy in this case. 

# 8 – Your Debt is Unmanageable

If you have frequently missed payments or creditors are harassing you to pay up, it might be a good idea to find another way out. If you are aware of your current income and know that it will not support the immediate resolution of your debts, repayment plans provided through Chapter 13 might be a good option. Chapter 13 bankruptcy allows a person to avoid asset liquidation by issuing a three to five-year repayment schedule, as part of which the debtor must agree to allocate all disposable income toward the repayment of this amount. 

# 9 – Your Wages are Being Garnished

If you do not repay your debts, it is possible that your creditors will commence legal action against you for nonpayment. If creditors win in court, they will then be able to garnish your wages. This means that your employer will be required to turn over a certain portion of your wages to pay your debts. Federal law prevents creditors from taking more than 25% of a person’s disposable income because garnishment to this degree can be devastating for one’s livelihood. 

Speak with an Experienced Bankruptcy Attorney

If you are considering the bankruptcy process, it can help to speak with a knowledgeable professional. Attorney Melanie Tavare has the experience necessary to help you and increase your chances of obtaining the best results possible. Contact attorney Melanie Tavare at (510) 225 – 4646 today to schedule a free case evaluation.