It can be difficult to know when to make the major move of filing a chapter 7 bankruptcy. Many people are loathe to acknowledge openly the poor state of their financial health, so they put the action off for too long. If you wait long enough, you will find yourself in court and being ordered to pay a creditor. There are, however, some signs that might pop up to let you know that you are getting closer to the inevitable. Read on to learn more.
Your Credit Card Use Has Increased
When you cannot make ends meet with the income you have, you might have to pay for necessities like food, automobile fuel, rent, and more using your credit cards. Unlike using your income to pay for these things, by using credit cards you are always accruing interest when you charge things. Come next month, you will find that your minimum payment has increased. In some cases, you are forced to take cash advances on your cards just to pay the minimum on other cards. This form of financial juggling is not a sustainable model for dealing with bills. Once you have large credit card balances that will take you years and years to pay off, you might need the relief that a chapter 7 bankruptcy can bring.
You Are Being Threatened With Foreclosure
Almost nothing strikes fear in the hearts of homeowners like the threat of losing their homes. Once you get behind on your payments, the interest and penalties can be even worse than that of a credit card. When the lender has had enough, they will take your home away from you. When your efforts to resolve things with your lender come to naught, it might be time to consider bankruptcy. It's important to note that a bankruptcy filing alone won't be able to prevent a foreclosure, but it might help improve your general financial situation enough that you can get caught up. For example, once you file you will no longer need to make credit card payments, and that extra money might be enough to save your home. A bankruptcy filing will also give you a few months to get caught up since it puts the foreclosure on hold.
You Are Being Hounded by Debt Collectors
When you fail to pay your bills, your debt gets turned over to a collection agency. Though there are rules to protect consumers from some of the more annoying tactics used by debt collectors, they can still drive you nuts. You may be receiving daily phone calls, and your mailbox may be filled with letters from collection agencies. Once you file for bankruptcy, the collection activity comes to an immediate halt, which brings peace for the first time in many months.
To learn more about how to know when enough is enough when it comes to your financial situation, speak to a bankruptcy lawyer like Charles J Schneider PC.