Submitted by Rachel R on Mon, 02/04/2013 - 3:31pm
If you’ve cut through all the negative hype from the credit and loan industry about declaring bankruptcy, then you know it’s a viable option to get out from under the crushing load of debts that are burdening you. The negative consequences of filing for bankruptcy are real, but they don’t last forever, and you will get the fresh start you so desperately need. But how do you know for sure that you’ve reached the point where bankruptcy is called for? Here are five signs to pay attention to:
1. All Your Credit Options are at or Near Their Limits. If you have a number of unsecured credit card or store card accounts and they are all at or very near their limits, it is a sign that you are approaching the point at which bankruptcy can really help you. If even making the minimum payments on all of these accounts has become increasingly difficult or nearly impossible, bankruptcy can offer relief. If you have little equity in your home and other assets, Chapter 7 is probably your best bet because it wipes out all unsecured debts forever. If you have good income and sizeable equity in various assets, then you might consider a Chapter 13, which lets you keep all of that property and come up with a manageable payment plan over three to five years.
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2. You’re Considering Cashing Out Some or All of Your Retirement. In short, don’t do it! The fact that you’re even considering doing this is a good sign that bankruptcy can probably help you. After all, you don’t want to jeopardize your future retirement funds – you’re going to need them if you don’t want to have to work into your 70s! If you’re still 10 or more years away from retirement age, it’s critical that you protect those funds, and declaring bankruptcy will do just that, while at the same time either eliminating or greatly reducing your other debts.
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3. You’re Receiving Calls Day and Night from Creditors or Collection Agencies. This is a sign that you’re already in deep trouble, and the calls won’t stop. They will make you deals to pay off just a portion of the debt you owe, which sounds like a great deal, but understand that any amounts of debt that are “written off” will come back to haunt you at tax time because those forgiven debts will be reported to the IRS as taxable income. It would be better in this situation to use those payments to hire a qualified, reputable bankruptcy attorney to help you file and resolve your case. When you file for bankruptcy, the calls from creditors and collection agencies have to stop. Your debts go away and you won’t face additional tax burdens. That’s a win-win situation for you!
4. You’re Falling Behind on Your Rent or Mortgage. Housing is one of your most basic needs that must be met. If you’re falling behind in rent or mortgage payments, you risk being evicted from your rental or having your mortgage lender foreclose on your house, which effectively puts you out on the streets. Filing for bankruptcy will immediately stop any foreclosure proceedings and gives you a chance to figure out how to stay in your home.
5. You’re Borrowing Money to Pay Basic Living Expenses. If the only way you can get by is to borrow money, whether from family, friends, credit cards or payday loans, you’re in deep financial stress. From here, it’s very unlikely that your situation will suddenly change for the better, so this is your wake-up call to stop the madness by filing for bankruptcy.
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Declaring bankruptcy is no laughing matter. It will have consequences for a number of years in terms of being approved for loans or other credit applications, but in time you can return to normal and begin rebuilding a more positive credit history. The pain involved in filing for bankruptcy now is nothing compared to the pain you will experience further down the road if you wait. If you're facing financial hardship, schedule a free consultation with a qualified local bankruptcy attorney today.
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