The decision to file for bankruptcy is, in most cases, not an easy one to make. Cases of people waiting until it’s too late to declare bankruptcy have been reported. This usually leads to increased debt, further damage to credit, increased mental health issues and more aggressive creditor actions.
So, when should you declare bankruptcy?
Struggling to make debt payments
If you can no longer make minimum credit card payments or have to take on other debts to pay your loans, it may be time to consider bankruptcy because, at this point, your debt has become unmanageable.
Falling behind on payments
You should be concerned if you are falling behind on your mortgage, car loan, utilities and other payments. These delays can lead to foreclosure, repossession, or discontinuation of essential services, such as water, gas or electricity, if you fail to protect yourself soon.
If you are already facing foreclosure or repossession, filing for bankruptcy can temporarily halt the process while you plan your finances.
Using credit cards or personal loans for necessities
Relying on credit cards or personal loans to pay for necessities like groceries and utilities because you don’t have sufficient income to cover them can be an indicator of financial distress.
Constant calls from debt collectors
If you are receiving frequent calls from debt collection agencies, it can help to file for bankruptcy. The volume of calls and letters you are likely to receive can affect your mental health. You may feel stressed when your phone rings or when you open your mailbox. Stop this stress and potential harassment by declaring bankruptcy.
Various factors can contribute to someone delaying filing for bankruptcy. These include lack of information, misinformation, shame, fear or guilt. If you are struggling to make ends meet, get more information on how you can get a “fresh start.”