This is a question I get a lot. How do you know it’s time to consider bankruptcy as a real option?
There’s no set answer and no right or wrong answer. But here are some things to consider:
Are you always getting to the end of your money before you get to the end of the month? I’m not talking about living paycheck to paycheck. If you run out of money but payday is tomorrow, and you’re able to pay your bills on time, your problem is probably solvable with budgeting rather than bankruptcy. No, what I mean is, do you find yourself constantly strapped for cash with bills to pay before the next payday comes.
Are you robbing Peter to pay Paul? This is a shorthand way of asking, do you pay some bills this month and let others go, and then the next month pay those while skipping those bills you paid last month? This is a constant balancing act and as we all know, balancing acts have to come to an end sometime.
Are creditors calling you daily or even weekly? When you start getting regular phone calls from creditors, you’re in danger of slipping underwater. Creditors usually don’t start hounding people by phone until the debt is 60+ days past due. If you’re 60 days or more past due, you have a problem.
Has foreclosure or repossession started or been threatened? Foreclosure and repossession are two methods that secured creditors use to collect. A secured creditor has collateral for the debt. Mortgages and car loans are two types of secured debt. If you go too far delinquent on a car loan, the bank can repossess the car, meaning they can take it from you and sell it. Foreclosure is a way of collecting when a debt is secured by your home. Since the bank can’t repossess the land, it forecloses instead, meaning it sells your house at an auction.
Do you find yourself constantly worried about your bills? If your debts are to the point that they are interfering with your enjoyment of life, then things have gotten to the point that you need to consider a permanent solution. For some people, $100,000 or more in debt doesn’t concern them. For others, $5,000 causes sleepless nights. Everyone is different. Just because your debts aren’t large in a numerical sense doesn’t mean they aren’t causing big problems for you.
Is your financial situation causing family problems? Disagreement over money is one of the leading causes of divorce. If your debt situation is such that you and your spouse argue over it, the time might have come to consider bankruptcy.
Do you look ahead but can’t see a better future? If your future doesn’t look bright because you have insurmountable debt issues, it’s probably time to think about bankruptcy.
If you answer “yes” to any of these questions, you should at least consider bankruptcy as an option. It doesn’t mean that bankruptcy is the only option; or even the best option. But it does mean it’s time to talk to a professional about your options. Remember, sometimes filing bankruptcy is the most responsible thing you can do. If you have questions, contact us. The initial consultation is always free.