Instances Where You Might Want to File for Bankruptcy
Here are four instances you could find yourself in where you may want to consider filing for bankruptcy:
- Behind on Bills – Life is unpredictable, and sometimes you’re not prepared for a financial crisis. If you know you won’t be able to pay your bills on time every month, or have already fallen behind, filing for bankruptcy could help you get back on your feet. Read up about how the different bankruptcies could help your financial situation here.
- You Have Debts in Collection – If you’ve been building up debt, you could find yourself being sued if you ignore debt collectors for long enough. If you think you could be put in this position, filing for bankruptcy could help. Filing for bankruptcy places an automatic stay against debt collectors and creditors and can stop any additional collection action.
- Wages are Garnished – In order to pay off debt, creditors can take extra action to make sure the amount owed is paid, including obtaining a court order to garnish your wages. When this happens, your employer must hold back a certain amount from each paycheck, which goes toward the debt you owe. Similar to being sued or asked for money by debt collectors, the automatic stay after filing for bankruptcy can stop your wages from being garnished.
- In Danger of Losing Car or House – If you’re behind on your car or house payments, a bankruptcy may be able to stop a repossession or foreclosure, if only temporarily. Filing might give you the time to catch up on payments. Still, before it happens, you’ll want to talk to your lender about options if you’re in danger.
The Bottom Line
Because everyone’s experiences are different, knowing the right time to file for bankruptcy depends on the situation. Filing for bankruptcy is a decision that shouldn’t be taken lightly, and we urge you to seek advice from legal counsel if you’re seriously considering it.