Filing for personal bankruptcy is never an easy decision. Most people prefer to address their financial struggles without involving the courts. They hope to adjust their budgets or increase their income to regain control over their current debt-related challenges.
Unfortunately, people sometimes delay bankruptcy for so long that they diminish how much benefit they derive from filing. There are certain warning signs that bankruptcy is the best solution available for unsustainable financial circumstances. For example, the following are three of the most common and crucial indicators that bankruptcy might be the best solution available.
A creditor lawsuit
Bankruptcy doesn’t just allow the filer and opportunity to discharge eligible debts. They also have a chance to avoid aggressive collection efforts. In scenarios where a creditor has served an individual with documents for a debt-related lawsuit, bankruptcy may be the best solution. The automatic stay granted the day that someone files can lead to the dismissal of a pending lawsuit and the cessation of other debt collection attempts. If people fail to respond promptly to a creditor lawsuit, they may be at risk of wage garnishment and judgments that bankruptcy doesn’t necessarily resolve.
Missed payments on a financed vehicle
Overwhelming debt often leads to people prioritizing certain financial obligations over others. They may delay making credit card payments in favor of paying their mortgages, for example. Some creditors give people time to catch up, but others are more aggressive about holding debtors and borrowers accountable. Companies that finance vehicle purchases can potentially repossess a vehicle after just one missed payment. They don’t necessarily provide any advance warning of their intent to do so either. Those who worry that their vehicle might be at risk may benefit from bankruptcy, especially if they cannot immediately catch up on their missed payments.
Considering high-cost debt solutions
Another warning sign that bankruptcy might be a smart choice is the belief that expensive debt relief programs are the only option available. Balance transfers, debt consolidation loans and debt settlement services often worsen people’s financial circumstances. Instead of looking for short-term solutions to prevent aggressive collection activity, it is often better to resolve the underlying debt. If a payday loan or similar financial solution seems like the only viable option, bankruptcy might actually be a better choice.
Those who recognize warning signs of serious financial hardship can potentially protect themselves from financial situations that may otherwise spiral out of control. Filing for personal bankruptcy offers immediate relief from collection activity and may lead to a budget that is easier to balance in the future.
