4 Signs it's Time to File for Bankruptcy

Perhaps you've hit a financial rough patch in your life or your business model didn't work as effectively as you had predicted. Perhaps credit card debt and loans you have taken out have finally crept up on you and you have found that you are unable to keep up with the payments. If these are the case, then it might be the case that you should file for bankruptcy.

Every year, close to 1,000,000 people file for bankruptcy, the majority of these being Chapter 7 bankruptcy cases. Although bankruptcy is considered a last resort to resolve your financial woes, it might be the case that it is right for you. Included here are four signs that it's time to file for bankruptcy.

Sued by Debt Collectors

If you are unable or unwilling to pay off debts, it is most likely the case that your debt will be sold off to a collection agency. Collection agencies tend to play a bit rough, so they do not take kindly to you avoiding their phone calls. If you avoid collection agencies for too long, they will most likely sue you in order to collect this debt.

Going to court over these non-payments is, generally speaking, a long and costly process. By filing for bankruptcy, you are offered some protection against these loan agencies and creditors. By filing for bankruptcy, you automatically have a stay put in place against these creditors taking any legal action against you.

Garnished Wages

In addition to being sued, there are a number of other legal procedures that a collection agency can take against you. One thing that they can do to you is cause you to have your wages garnished or your bank account frozen. When your wages are garnished, this means a set percentage of your wages are taken out of your paycheck and paid to your creditors. If your bank account is frozen, this means that you are unable to remove funds from your account.

Bankruptcy can protect you from both of these occurrences. The stay that is put into place by filing for bankruptcy means that agencies will be able to garnish your wages and the freeze on your bank account will be lifted.

You Can't Pay Your Bills

There are numerous reasons why people cannot pay their bills. Maybe you have found that you have recently lost your job or that you have been laid off; maybe you have had a death in the family and have had to take time off of work without pay. The reasons, as mentioned, are many. However, with bills piling up and collection agencies calling your phone, you must realize that the bills do not magically disappear. Thankfully, bankruptcy can help. In fact, bankruptcy was specifically designed to help individuals whose income cannot meet their debt load.

In Danger of Losing Your Home

Although the housing market has significantly improved in recent years, this does not mean that you are not in danger of losing your home to foreclosure. There are still many people for which this is a very real fear. Bankruptcy can help you keep your home and also serve to help you keep up with paying off debt and bills at the same time.

If you file for Chapter 13 bankruptcy, this allows you to keep all of your assets, including your home, and organize a repayment plan for any outstanding debts that might be in your name. As long as you keep up with said payments, you won't have to worry about a foreclosure.

Bankruptcy sounds like a bad plan in the ears of many people, but it could be the one thing that saves you from any number of horrifying phenomenon, including homelessness. If you are thinking about bankruptcy as an option, contact a bankruptcy attorney to help you better assess if filing bankruptcy is right for you.