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When is it time to seek personal bankruptcy?

On Behalf of | Jun 25, 2024 | Firm News

Are you overwhelmed with debt? If so, you’re probably clawing to drag yourself out of the hole. But despite your years of effort, you might feel like you’re not making much progress. Hundreds of thousands of Americans find themselves in similar circumstances, wondering what they can do to obtain some semblance of relief.

If you’ve found yourself to this post, then you’re probably considering bankruptcy. But with so many misconceptions out there, you might be hesitant to embrace the process, and as such you might wonder whether bankruptcy is really right for you.

That’s a question that only you can answer, but a successful bankruptcy petition can provide you with financial relief and a fresh financial start. But how do you know if it’s truly time to seek bankruptcy?

Signs that it may be time for you to consider bankruptcy

There’s no perfect point at which to seek bankruptcy protection. However, if you’re experiencing any of the following, then it might be time to consider pursuing the process:

  • You’re consistently behind on your bills: If you can’t keep up with your bills, then you’re bound to face additional fees and interest. This can quickly compound, leaving you even further behind on your debt despite your best efforts to get out ahead of it. If you’re falling further and further behind, then it might be time to consider pursuing personal bankruptcy.
  • You’ve been named in lawsuits filed by creditors: When debt collection efforts prove unsuccessful, your creditors might file a lawsuit against you. When they do, you’re at risk of being subjected to additional court costs and attorney fees, thereby causing you to owe more than you did going into the case. A personal bankruptcy can put a stay on these legal proceedings, giving you time to sort the matter out or discharge your debt. It can also avoid the stress associated with dealing with a lawsuit filed against you.
  • You’re subjected to foreclosure proceedings: If the bank is threatening to foreclose on your home or has already taken steps to do so, then a bankruptcy petition may be the only way for you to stop the proceedings and buy yourself enough time to get caught up on your mortgage or develop an alternative plan for your living arrangements.
  • You’re subjected to wage garnishment: When debt collectors secure a judgment against you, they may be able to garnish a significant portion of your wages, making it hard for you to make ends meet. Like with other debt collection processes, though, a bankruptcy petition can stop wage garnishment until your bankruptcy is finalized, thereby giving you some financial breathing room as the process plays out.
  • You’re pulling from retirement accounts: If you don’t have any other options to pay your bills, then you might be tempted to pull money out of your retirement accounts to make ends meet. But since most, if not all, of your retirement accounts will be exempted from the bankruptcy process, withdrawing that money now to try to get ahead of your debt could do nothing more than waste resources that you could otherwise protect.

Do you think now is the time for you to seek bankruptcy?

If so, then you need to learn as much as you can about the process. Only then can you comfortably navigate the process and make the legal decisions that are right for you. By being informed and honest about what you want for your future, you can position yourself to claim the life that you’ve been fighting to secure for so long.