Filing for bankruptcy is a big decision as it has the potential to change your life drastically. Therefore, it is paramount not to take this lightly because the repercussions can be severe. If done the right way, however, filing for bankruptcy can help you save your money and get back up on your feet earlier than you think.
Moreover, it can help you with stopping a foreclosure, repossession, and wage garnishment, which otherwise can ruin you when you are pushed into a tight financial spot. You may find tips to avoid bankruptcy because it is typically envisaged as something that must be avoided. But, we have listed here six valid reasons to file for bankruptcy.
1- You Are Buying Daily Necessities With Credit Card
Credit cards are supposed to give you a cushion against the extra expenses that you may come across once in a while. But, when you start buying your daily necessities with a credit card, it means you have a financial problem and you are adding more in your liabilities column.
Most people who resort to credit cards in such a way do so because their whole paychecks go into debt servicing every month and in the end they are left with empty pockets. This means the cycle of borrowed buying and paying the credit card installments will continue endlessly.
If this is your situation, it may be time to file for bankruptcy and hire a bankruptcy lawyer. If Spanish is your first language and you are way more comfortable in that language you can hire a bankruptcy attorney who speaks Spanish.
2- Missed Payments Led to Rate Increase
You are already caught in the debt servicing cycle and finding it difficult to survive from month to month. The situation gets even worse when you have missed a few payments, in which case most lenders, including banks and other organizations, jack up the interest rates by thirty percent, which means that you will have to pay thirty percent more than the original debt installment.
If you are coping with a similar situation, filing for bankruptcy may be your only way out.
3- You Are Facing a Lawsuit
If you are facing a lawsuit due to various reasons like failure to pay off medical debt, credit card debt, car accident damages, or failure to comply with a contract, declaring bankruptcy is a possible viable option for you.
There is no point in spending the little cash you have in your wallet on defending yourself against the lawsuits when you can get the debt discharged by declaring bankruptcy that could give you relief. But, be aware that not all lawsuits can be discharged by filing for bankruptcy.
4- You Have Multiple Jobs
In most cases, taking up an extra job or two will help to reduce the debt up to some extent, but it does not always help because sometimes the debt is too large, and even working three jobs is not going to cut it.
5- Debt-Related Stress Issues
If you are continually thinking about the debt you have to pay off to the point that you are not able to focus on your work or personal life, then declaring bankruptcy will go a long way in improving the quality of your life and workability.
6- You Are Pondering About Taking Money Out Retirement Fund
Your retirement fund is the cushion for your future livelihood and if you are looking to tap into that fund to pay your debt to set yourself free from the situation, this is an evident red flag. If this is your case, you should consider filing for bankruptcy to get rid of the problem.