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When is it time to declare bankruptcy?

On Behalf of | Jan 6, 2024 | BANKRUPTCY LAW - Bankruptcy |

Financial difficulties can be overwhelming. Digging oneself out of a hole may be impossible with even the most earnest attempts. At a certain point, individuals need to evaluate whether declaring bankruptcy is the best decision.

Recognizing the signs that indicate one should take this step is integral to making an informed choice.

Mounting debt

One of the primary signs it might be time to consider bankruptcy is overwhelming indebtedness. When efforts to manage and pay off loans become increasingly challenging, and the load continues to grow despite attempts to correct the matter, going this route may be necessary.

Missing payments

Consistently failing to make payments on various financial obligations, such as credit cards or mortgages, is another indication it could make sense to file for bankruptcy. If late payments become a recurring pattern, bankruptcy is sometimes the only way to clear the slate and get out from underneath the problem.

Impending legal action

Lawsuits, wage garnishments and foreclosure proceedings mean one is at a pivotal juncture. When creditors pursue such avenues against someone to recover owed monies, it signifies a heightened state of financial distress. In such cases, bankruptcy is an option that can protect one’s assets.

Dwindling savings

Struggling to cover basic living expenses suggests that finances are in the danger zone. Experts recommend having enough to cover personal expenses for three to six months, depending on the circumstances. When this cushion is no longer there, it puts the person in a precarious fiscal situation for which bankruptcy may be the only solution.

Recognizing the moment for declaring bankruptcy involves a calculated assessment of one’s financial plight. Bankruptcy should be a deliberate choice based on a frank evaluation of the fiscal reality.