Bankruptcy is usually worth considering when your debts are no longer realistically manageable. It’s a major legal step, so it’s generally best to evaluate all of your options before filing.
If you’re struggling with debt, there are several signs that may indicate bankruptcy is appropriate for your situation.
Signs It May Be Time to Consider Bankruptcy
You may want to consider bankruptcy if:
- You’re unable to make minimum payments on your debts and are falling further behind each month.
- Most of your income goes toward debt payments, leaving you unable to cover basic living expenses.
- You’re facing wage garnishment, lawsuits, foreclosure, or repossession.
- You have large unsecured debts, such as credit cards or medical bills, that you have little realistic chance of repaying.
- You’ve already tried measures like budgeting or debt management, and they haven’t solved the problem.
- Your financial hardship is likely to continue rather than being a short-term setback.
If these situations sound familiar, it may be time to take a closer look at your options.
Chapter 7 vs. Chapter 13 Bankruptcy
The two most common types of personal bankruptcy are Chapter 7 and Chapter 13.
Chapter 7 can eliminate many unsecured debts in four to five months.
Chapter 13 allows you to keep more property while repaying some or all of your debts over three to five years.
Which option may make sense depends on your individual financial situation.
What Factors Should You Consider?
A few factors can help determine whether filing for bankruptcy makes sense, including:
- Your total debts and the types of debts you owe.
- Your monthly income and essential expenses.
- The assets you own.
Bankruptcy is a major decision, and your overall financial circumstances should be considered when deciding whether now is the right time to file.
Is Now the Right Time to File Bankruptcy?
If your debts have become unmanageable and your financial hardship is likely to continue, it may be worth considering bankruptcy as one of your options.
If you’re trying to decide whether now is the right time, our team can help you think through your situation and determine your best options. Call our office today for a free debt relief consultation.