It is a normal challenge in life for most people to go through financially hard times. Things can happen, such as losing your job, that make paying bills difficult and put you into debt. They can happen to anyone, too, regardless of income.
When you find yourself in this stressful situation, you may wonder what to do to get out. Bankruptcy is one way, but is it the right debt relief option for you? Watch for these signs to know if you should file for bankruptcy.
1. Your debts qualify for bankruptcy
A popular myth is that bankruptcy wipes out all debts. Unfortunately, this is not true. Child support, student loans and taxes are not eligible for discharge. If your debts are from medical bills, credit cards or loans, then declaring bankruptcy may be the proper route to take.
2. You have no money for daily living
It can be easy for anyone to temporarily get behind on large bills, but when you lack the money for everyday expenses even with a budget, then that is a red flag. This situation can cause you to run up more credit card debt than you can never catch up on due to interest, which has also likely gone up due to late or non-payments.
When you have already taken up another job and are still behind, then you may want to consider bankruptcy. Just be sure not to wait until you are completely broke before exploring this option. Neither should you take money from your retirement account, as there are usually tax penalties for making early withdrawals.
3. Your assets are at risk
Secured debts are ones connected to collateral. When you do not pay, the lender takes back the collateral as payment. If you worry you will lose assets, then bankruptcy can help prevent that. It can stop foreclosure and repossession of vehicles, as well as wage garnishment. Bankruptcy can be the end of chaos and the beginning of financial peace.