People who call me inquiring about filing bankruptcy often believe there’s some rule or generally accepted answer to the question of “Should I file bankruptcy?”. I have to tell them there’s no such rule. There’s nothing but anyone’s own personal philosophy about when it’s best to file. I share my own philosophy that life is far too short to spend more than 2-4 years outside bankruptcy trying to pay off debt. There are more important places to spend our money. None of us have enough money saved for retirement. Some of us have college accounts for our children to fund. There are public charities far more deserving of our money than credit card companies charging 24% interest.
I understand that filing bankruptcy is a significant financial decision that should be considered carefully. But I feel it’s much more of a straightforward answer than most people allow. Here are some scenarios where filing for bankruptcy is the right choice:
- Overwhelming Debt with No Way Out
- When your total unsecured debt plus the accruing interest (excluding a mortgage, car loans and student loans) is more than you can realistically repay over 2-4 years.
- If you’re unable to make even the minimum payments on your debts or you constantly need to rely on credit cards to cover basic living expenses.
- Facing Collection Actions
- If creditors are aggressively pursuing you with lawsuits, wage garnishments, repossessions, or other collection actions.
- Bankruptcy can provide an automatic stay, halting most collection activities immediately.
- Risk of Losing Key Assets
- If your home is in foreclosure or your car is at risk of being repossessed and you don’t see a way to catch up on missed payments.
- Filing for bankruptcy can stop or delay repossession and foreclosure, giving you time to negotiate or restructure payments.
- Unmanageable Medical Bills
- When medical bills are beyond what you can afford to pay, especially if they’re unexpected and causing severe financial strain.
- Your Income is Too Low to Pay Off Debts
- If your current or expected income isn’t enough to cover even the minimum payments on your debts, especially if you’re only paying interest without reducing the principal.
- Deteriorating Quality of Life Due to Financial Stress
- When debt is causing significant stress, anxiety, or relationship problems.
People shouldn’t agonize over the decision to file bankruptcy as much as they do. Prolonging the stress and hardship that too much debt creates makes no one’s life better. Contact Nancy L Thompson Law Office through this website and start the path towards a future with no or manageable debt payments.
