When Does Bankruptcy Make Sense?

Filing for bankruptcy can be a big decision. Many people may suffer in debt for years before deciding to file. If you are struggling to stay afloat financially, you may be wondering whether bankruptcy is the right choice now, or whether it would be wise to wait. Below, we go over when bankruptcy can be beneficial and how filing for bankruptcy can help improve your financial situation. 

When Should I File for Bankruptcy?

You've lost your job and have been unemployed for an extended period.

People who are unemployed can rack up a serious amount of debt because they are unable to pay their bills. If you lost your job, have credit card debt, and cannot make your monthly payments on your unemployment check alone, you might want to file.

You are facing foreclosure and may lose your home. 

Filing for bankruptcy initiates an automatic stay, which puts a stop to the foreclosure process, giving you time to sort out your finances to save your home. With bankruptcy, you can create a repayment plan that allows you to catch up with your past-due mortgage and continuing with affordable monthly payments. 

You are receiving calls from creditors.

If you are receiving phone calls that are harassing you may want to file. Many individuals decide to file just to stop the calls. Once you miss a payment your account gets categorized as a “collection account” by the lender. The first collectors usually are civil. You will get calls, usually every day, asking for payment. You can choose to ignore those calls or take the call and explain your situation.

You or a family member went through a medical crisis.

Medical bills can be extremely expensive in the United States. Between hospital stays, treatments, and surgeries, a person could owe tens to hundreds of thousands in medical debt. Sometimes you can lower the bill by negotiating with hospital, but paying the rest can be a struggle for many families. Bankruptcy can discharge unsecured debt such as medical debt. 

However, if your illness has not been resolved and you anticipate more bills in the near future, it may be a better idea to wait so that your bankruptcy case can cover all of your debts. 

You have a large amount of credit card or unsecured debt.

Often deciding to file has to do with the amount of debt that you have acquired. If your credit card debt keeps growing despite making the minimum payments, you may find it impossible to repay everything in several years. Filing for bankruptcy can get rid of most if not all of these unsecured debts and allow you to start fresh. 

You are struggling to repay your student loans.

Student loans cannot be discharged through bankruptcy unless you can prove undue hardship. However, filing for Chapter 13 bankruptcy can help alleviate your burden by discharging other qualifying debts so you can free up your income to repay your student loans.  

Questions About Filing for Bankruptcy?

Once you file you can begin the rebuilding process.  The Law Office of Mayer and Newton offers a creditor education course to help raise you credit score.  Call us today

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