When (and Why) Should You Think About Filing for Bankruptcy?
The decision to file for bankruptcy is never easy. Many people have a negative perception of the bankruptcy process, and, while filing for bankruptcy (when it makes sense) affords several benefits, it does have some long-term consequences.
So, when should you think about filing for bankruptcy? Just as importantly, why should you seriously consider bankruptcy as an option?
When to Think About Filing for Bankruptcy Protection
Regarding when to think about filing for bankruptcy, the answer is pretty simple: If you are in debt and you can’t afford to pay your bills as they come due, you need to do something to protect yourself before your creditors start coming after you. While it is never too early to start thinking about bankruptcy as an option, waiting to file for protection can lead to unnecessary risks, costs and complications.
Plus, it costs nothing to ensure that you are making informed decisions with your long-term best interests in mind. We offer free bankruptcy evaluations, and attorney Georgette Miller can help you carefully evaluate all of your options.
Why You Should Think About Filing for Bankruptcy Protection
If you are falling behind on your bills, why should you consider filing for bankruptcy? To be clear, filing for bankruptcy isn’t the best option for everyone. But, it is the best option in many circumstances. This is because a successful bankruptcy filing can afford several benefits, including:
1. Debt Forgiveness
Successfully filing for bankruptcy can result in many (or even all) of your debts being forgiven. Once you’ve eliminated the debts you can’t afford to pay, you can stick to a budget that allows you to get back on solid financial footing, start rebuilding your credit and start saving for the future.
2. Stopping Creditor Harassment
Not too long after you fall behind on your bills, your creditors will start calling—and they will be relentless. Phone calls every day, at work and at dinner time, can disrupt your life, and they can cause an extraordinary amount of stress. When you file for bankruptcy, this triggers what is known as an “automatic stay.” This is a court order that prohibits your creditors from engaging in any collection-related activities while your bankruptcy case is pending.
3. Stopping Wage Garnishment
One way many creditors will try to collect on their debts is by garnishing debtors’ wages. When a creditor garnishes your wages, an amount is deducted from your paycheck each week to pay down what you owe. The automatic stay also prevents your creditors from garnishing your wages.
4. Stopping Liens and Foreclosure
The automatic stay that comes with filing for bankruptcy under Chapter 7 or Chapter 13 also prevents your creditors from taking out liens on your property or initiating foreclosure. It is much easier to avoid liens and foreclosure than it is to deal with them after the fact. As a result, if you are concerned about having a lien filed against your house or car, or if you are behind on your mortgage and facing foreclosure, it is strongly in your best interest to speak with a bankruptcy lawyer as soon as possible.
5. Stopping Repossession
In addition to stopping creditor harassment, wage garnishment, liens and foreclosure, filing for bankruptcy protection also stops repossession. If you are concerned about losing your car or any other property you own, this is a very good reason to consider filing for bankruptcy promptly as well.
6. Catching Up On Your Bills
While seeking debt forgiveness is one way to approach the bankruptcy process, you can also use the bankruptcy process to catch up on your bills. For example, let’s say you are falling behind on your mortgage and you (like most people) don’t want to lose your home. While eliminating your mortgage debt would involve selling your home and using the sale proceeds to pay off what you can, filing for bankruptcy also gives you the option to develop a payment plan that allows you to keep paying off—and keep living in—your home.
7. Rebuilding Your Credit
When you are behind on your bills—and falling further behind every month—this can ruin your credit. Filing for bankruptcy stops the downward spiral, and it allows you to start rebuilding your credit immediately. While it will take time to get back to a high credit score, getting started as soon as you can allows you to get there as soon as possible.
8. Getting Credit Counseling
When you file a personal bankruptcy under Chapter 7 or Chapter 13, you will generally be required to attend credit counseling. While most people view this as a burden, it is also an opportunity for those who need it. If you have trouble managing your finances, or if you don’t fully understand how loans or credit cards work, getting credit counseling will help you make smart decisions in the future.
9. Getting Rid of Your Stress
There is no question that being in debt is stressful. But, what many people don’t realize is just how much their stress impacts their day-to-day life. Once you are back on solid financial footing, you will feel a weight lifted from your shoulders, and you will truly feel like you have a new lease on life.
10. Getting a Fresh Financial Start
For most people, the road to unmanageable debt is a slow one. They get a home or car loan, and for a while everything is fine. But, then they take out another loan, then another, and eventually they start carrying a balance on their credit card. Then, one morning they wake up with bills they can’t afford, and they’re not sure where it all went wrong.
Filing for bankruptcy gives you a fresh start. Regardless of your financial history, and regardless of how you got where you are today, after you go through the bankruptcy process, you will be on firm financial ground.
Get Started with a Free and Confidential Consultation
Do you have more questions about filing for bankruptcy? If so, we invite you to get in touch. To get started with a free and confidential consultation, call 866-964-6529 or inquire online today.