The decision to file for bankruptcy isn’t one to take lightly. Individuals who are facing large credit card balances, medical bills and past-due mortgage payments can use this option to get out from under insurmountable debt. However, it’s a choice that should be avoided if possible.
Bankruptcy isn’t an easy fix, there are lasting consequences that can make it difficult to regain financial footing. It’s reflected on your credit history for as long as ten years and can make qualifying for loans more difficult. However, there are times when filing is worth it and here are just a few.
You’ve Exhausted All Other Options
Filing for bankruptcy is meant to be a last-ditch effort at gaining control of your debt. Before moving forward, it’s important to exhaust all other options. One option that many people miss is negotiating with creditors. Since creditors lose money when debts are erased in bankruptcy, they’re often willing to negotiate smaller payments or paying off a bill in one reduced lump sum.
Consider creative options for paying off debt. If it’s possible to sell property, downsize or turn to a relative for financial help, doing so might be a better choice.
Your Debts Overshadow Your Assets
With a clear understanding of your financial situation, it’s easier to make a decision about how to move forward with handling debt. Write down all assets, along with their value, and compare this number to money owed. If the debt side is significantly more than the asset side, it may be time to consider filing for bankruptcy.
You’re Drowning in Financial Stress
Unmanageable debt can create an extreme amount of stress and anxiety. It’s normal to feel worried about money from time to time, but if the overall financial picture makes you feel hopeless, this is a red flag.
Experiencing depression and extreme anxiety related to debt isn’t healthy. Financial stress has led to failed marriages and suicide. If bankruptcy is a chance to take back your life and mental health, it might be the right choice.
Filing for Bankruptcy
There are different types of bankruptcy that are appropriate in different circumstances. A qualified attorney is an invaluable asset for making decisions about filing and taking the first steps toward a more stable financial future.
~Here’s to Your Financial Health