Many people make a New Year’s resolution to create and stick to a budget. However, increasingly, more Americans are looking at overwhelming debt that can’t be overcome simply by cutting back on non-essentials or getting an additional job.
If your debt, regardless of what created it, is affecting your ability to pay necessary bills, like rent, utilities, school fees and even a trip to the grocery store, it’s worth considering whether bankruptcy may be the best way forward.
You wouldn’t be alone. Between Sept. 30, 2024, and Sept. 30, 2025, non-business bankruptcies in the U.S. rose nearly 11%. Over a half million people filed for non-business bankruptcy.
Don’t ignore these “red flags”
Certainly, bankruptcy shouldn’t be the first or only debt relief option you consider. However, there are certain “red flags” that experts say may indicate that it’s worth seriously looking at. These include doing any of the following to keep up with your bills:
- Withdrawing money from your child’s college savings or your own retirement savings accounts
- Getting payday or similar loans
- Repeatedly transferring credit card balances from one card to another to get a better (or even introductory 0%) rate
If you’ve got creditors or collection agencies contacting you, that’s also a big red flag.
The importance of learning more about bankruptcy
While bankruptcy isn’t something to rush into, you also don’t want to wait too long if things are going in the wrong direction. One bankruptcy expert who teaches law says that “people are struggling with their debt for more than two years” before they get legal assistance.
This guidance can help you learn more about both Chapter 7 and Chapter 13 bankruptcy, how they differ and which is right for your circumstances. This can help with other debt-related matters – for example, if you’re facing foreclosure. Having professional guidance can help you feel less alone and more confident about your financial future.