When is it the right time to file for bankruptcy protection?

On Behalf of | Sep 9, 2020 | Bankruptcy |

Nearly everyone has some type of debt. From car payments and mortgages to credit card balances, you are probably on the hook for something. For many people, maintaining a reasonable level of debt is a balancing act. However, things can become unbalanced quickly. The sudden loss of a job, unexpected medical expenses, and other financial crises can cause things to spin out of control in the blink of an eye.

Fortunately, you may be able to seek bankruptcy protection if you find yourself in a deep financial hole. The problem is many people are slow to seek this type of debt relief. Indecisiveness can make a bad situation even worse. It’s important to understand when it’s the best time to file for bankruptcy.

Situations where it’s time to consider your debt relief options

If you happen to overlook a bill or otherwise miss a payment, it’s not necessarily time to go into panic mode. However, you don’t want to wait until you’re drowning in debt, either. If you find yourself in any of the following situations, it’s probably time to give serious thought to exploring your bankruptcy options.

  • You’re being contacted by collections agencies: One letter informing you of a past due payment is manageable. However, when your phone won’t stop ringing and collectors start making payment demands, it’s time to take things seriously. Collection activities are only likely to escalate. You might even experience wage garnishment or be subject to legal actions.
  • You’ve received threats of foreclosure: A missed utility bill or two is one thing, but when you miss a mortgage payment or two, your lender might begin foreclosure proceedings. When you file for bankruptcy, you will put a temporary stop to these proceedings. This can buy you the time you need to determine your next move. If you’re able to catch up on your payments, you may even be able to save your home.
  • You’re going further in debt to pay off your debt: Things are dire when you’re borrowing money to pay off another type of debt. When you use one credit card to pay down another, or when you ask a loved one for financial help, you’re achieving a temporary solution, at best. You could very well find yourself worse off than before.

You should never feel ashamed about seeking a long-term solution to debt problems through bankruptcy. The sooner you address these issues, the sooner you can start repairing your financial situation. A skilled professional can help you explore your options.