5 warning signs that it might be time to consider filing for bankruptcy
By Barbara Craig, Attorney at Law
Making the decision to file for bankruptcy can be difficult. There are several signs that you should look for to determine if and when you should file for bankruptcy.
1. Your home is in foreclosure or the bank is threatening you with foreclosure, or your vehicle has been repossessed or is on the verge of repossession.
- If you are behind in your mortgage and have no way to get current, the mortgage company can take your home away by successfully foreclosing on your home.
- Often times, even after your auto is repossessed, you will still owe money to the lender for the difference between the amount of your outstanding car loan and the value of the car at the time of repossession.
- Bankruptcy can wipe out any deficiency you may owe from a home foreclosure or auto repossession. Or, if all of your other debt is discharged in bankruptcy, you may be able to get caught up on your payments and avoid losing your house or vehicle.
2. You spend more than you make each pay period, have no savings, or use payday advances to make ends meet.
- If your paycheck does not last the entire pay period, or you live paycheck to paycheck, your debts may be dragging you down.
- If you cannot afford to put money away and have not already accumulated an emergency savings fund, you may be just one unexpected emergency away from being financially ruined.
- Payday advances cause people to get behind and stay behind. The interest rates are typically extremely high, and having a payday advance payment come due on payday will only make your situation worse.
- By wiping out most or all your debt in bankruptcy, you can use your paycheck to pay your monthly living expenses and it will last until the next paycheck comes in.
3. Your credit cards are maxed out and/or you pay only the minimum monthly payment.
- If you have little or no available credit, it is typically because you financed large purchases or used your credit cards to support your lifestyle.
- You don’t have enough money left over each month to pay more than the minimum payments because you are living paycheck to paycheck.
- By paying only the minimum balance, it can take years – even a decade or more – to pay off a credit card.
- Bankruptcy can eliminate your unsecured credit card debt for far less than what it would take to pay the cards off, or give you the breathing room you need to pay it off in a reasonable amount of time.
4. You are having trouble taking care of your family, pet, home, or vehicle.
- Making your debt payments leaves so little left over each month that you must make difficult choices about how to spend your money.
- Sometimes you are forced to scrimp on basic necessities like food, clothing, shoes, or other needs.
- You may have considered putting off doctor visits, dentist appointments, or veterinary care because you couldn’t afford it.
- You might be delaying household or auto maintenance, which can result in more costly problems with your house or car later.
- Bankruptcy can remove the pressures of making payments on old debts and give you and your family the fresh start you need.
5. Your wages are being garnished because of unpaid judgments.
- At some point you got behind on a payment and the creditor got a court judgment against you for the amount you owe. The judgment is collectible by wage garnishment if you are working.
- Bankruptcy can eliminate the judgment and garnishment orders so you can use your paycheck to pay monthly living expenses and not have it go to garnishments.