How Do I Know If I Need Bankruptcy Protection?
Not everyone who is in debt needs bankruptcy protection. We believe that people should, as a general rule, pay their debts. But, if you find yourself in one of the following situations, you should definitely consider a resolution that will solve, not merely procrastinate, your problem.
1. You can't make all of your "minimum" payments
If you can't make all of your minimum payments each month on your current income and find that you are falling deeper and deeper in debt each month, then bankruptcy protection may be your best option to stop the downward spiral.
2. You are facing foreclosure
If you are facing foreclosure on one or more properties, you should very seriously consider bankruptcy protection for several reasons. See Foreclosure Defense for more information.
3. One or more substantially "underwater" properties
If you own one or multiple properties that are "underwater" - that is you owe substantially more money than the property is worth - there may be newly emerging avenues of relief available through federal laws which must be accessed through an orderly Chapter 13 petition.
4. Vehicle repossession
If you are facing repossession of a vehicle that you absolutely need to get to work, you should consider some type of legal assistance.
5. Excessive debt load vs. income and minimal retirement savings
If you are carrying a debt load that can't be reasonable paid off in 3 years, in combination with little or no retirement savings, you should strategically consider a long term restructuring of your financial future. Tally up all of your debt (excluding a long term mortgage on a primary residence or on other real estate) and calculate whether you will be able to pay it off with your best efforts within 3 years. If the answer is "no" you should consider a restructuring which would allow you to set aside some kind of retirement savings for yourself.
If you are not paying anything into a retirement account, but instead, are merely making payments on credit card debt, you may be backing yourself into a very unpleasant corner when you reach retirement age. You may have made financial mistakes in the past, but it is not too late to charter a course change in your finances and start accumulating savings instead of merely servicing debt.
6. Stress from debt affecting marriage & health
We all must put our priorities in order and, if excessive debt is causing substantial discord in your marriage, or lack of sleep, anxiety, worry or other stress-related health problems, take a long look at your priorities. A well planned financial restructuring, along with a true commitment to prudent future financial management, can have lasting positive effects far beyond the financial realm.
A fresh start following a bankruptcy filing is not a cure all for every financial problem. But in many cases, it may be a pre-requisite to start the rebuilding process for your financial future.
What about Credit Counseling or Debt Management Companies?
We recommend great caution when dealing with such companies as deceptive practices are commonplace, click here for more information.