Bankruptcy is a scary word for many. However, admitting bankruptcy is one of the boldest steps a person can make while suffering from financial woes. Not everyone would agree that he or she is struggling to meet his or her obligations, but this might be an option to consider. Look out for the following signs and if they apply to you, consider filing for bankruptcy:
1) Too Much Debt
Failure to meet your obligations to creditors can lead to legal and other collection actions to offset them. To reduce the risk of losing it all to your creditors, you can file for bankruptcy as it halts all actions initiated by creditors to collect from you. Credible law firms can help you apply for debt limits for Chapter 7 and Chapter 13 Bankruptcy with a focus on your financial situation and help you renegotiate your terms. With chapter 7 provisions, you can settle your debts by selling your assets. The amounts raised from this can be split amongst your debtors. However, Chapter 13 shields you from losing all your assets. The court allows you to keep part of your properties and assets from being sold or liquidated by debtors despite being considered for disposal. These provisions are helpful when you are neck-deep in debt, and you would like an opportunity to restructure and start on a clean slate.
2) Loss Of Income
Unfortunate situations can abruptly lead to loss of income. In this case, you need to prove that you cannot meet your obligations with the current income. For eligibility, your current financial position should prove your debts and bills are higher than the income earned. You must also have a track record of settling your obligations on time. The court will therefore intervene and meditate on your behalf to creditors. It stipulates the amount you should pay, and if this is done religiously, you can rest easy knowing your properties are not going to be reclaimed by your debtors.
3) Debt Consolidation
This is a situation where you start seeking help from debt managers. This is a bankruptcy sign because the actual debt amounts might further increase once the debt managers include their service costs. It is also a short-term option since you will still pay the full amount with time. Ultimately, it leaves you enough room to acquire more debt since the previous amount has been offset by the debt managers, and this pushes you deeper into debts.
4) Using Loans To Offset Bills
In case you apply for loans and all that money does is to pay your bills, you can file for bankruptcy. Since you incur expenses every day, you will keep requesting for loans until you reach your maximum loan limit. At this point, any other utility bills incurred will be unpaid. The debts accumulated may require action from debtors to recoup their funds. Filing for bankruptcy at this point would help you save a lot.
5) Credit Card Limits
You ought to start worrying when you start putting all your daily necessities onto your credit card, and you cannot pay for them in cash. This is a red flag indicating that you are in serious financial trouble. In this situation, you should file for bankruptcy. Credit cards offer unsecured loans. Therefore, the principal and interest charged will increase your debts significantly. Applying for bankruptcy ensures you avoid such and find a more comfortable payment option.