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5 Signs That Bankruptcy May Be Your Best Option
Even in these tough economic times, bankruptcy is seen as a last ditch option when all other methods of debt repayment have been exhausted. While bankruptcy does create a black mark on your credit report, often the damage from filing is less than what would be accrued by continuing to hold on to debt you cannot repay. Here are five signs that you probably need to file for bankruptcy as your next step towards financial security.
Your Debt Far Exceeds Your Income
Many American consumers are carrying heavy debt loads in contrast to their incomes. Once your debt reaches a certain amount, any possible repayment becomes almost impossible. If your income is stretched to the breaking point just by making minimum payments on your debt, bankruptcy might be the only way to wipe the slate clean and get your finances back under control.
You Have Suffered a Major Financial Crisis
Filing for bankruptcy doesn't necessarily mean that you are financially irresponsible. Sometimes, life throws circumstances at us that create debt beyond the capacity that we can handle. Divorce, major illness, death and extended unemployment can create a vicious cycle of fees and charges that you could have a difficult time paying back, even when you do get back on your feet. Bankruptcy can give you a sturdier footing to start your life over once you are solvent again.
You Have No Savings
If you have already drained your savings account and even your retirement fund to get a handle on debt but are still struggling to make your payments, you could be simply digging yourself into a deeper financial hole. Not having any savings means that you are at the mercy of any crisis that could set you behind even further and ruin any debt payment progress you have made. Retirement savings are important to securing your future as well. Without those, you may have to delay retirement by years.
You Are Facing Repossession and Foreclosure
You need a place to live and, in many cases, a vehicle to get back and forth to work. If you are in danger of losing either of those things to repossession or foreclosure, you can expect to be set back even further as you deal with potentially losing employment due to lack of transportation or being homeless. Bankruptcy laws are in place to protect consumers from getting themselves into irreparable situations like this.
Other Options Haven't Worked
You've tried debt counseling. You've tried negotiating with your creditors to adjust your interest rates or even lower your debt. Yet, despite these measures, you are still struggling to make payments. If you have tried the available options to repay your debt, but they have not worked to make it easier to fit payments into your current budget, bankruptcy might be the only option to get control of your finances again.
Bankruptcy is an option that many, due to either pride or lack of knowledge, don't exercise until it is far too late. Knowing the signs that you need to consider filing for bankruptcy can save you years of stress while helping you get back on your feet more quickly.