When to File Bankruptcy
Let's say you're having trouble paying your bills, you're worried about money and you're not sure whether you'll be able to make it to your next paycheck without taking on a payday loan or borrowing money from a friend.
You know you're in financial distress, but how can you know when to file bankruptcy? Or even whether bankruptcy is the right solution for you? To ask a bankruptcy lawyer about your current situation, please fill out this form and arrange a free, no-obligation initial consultation.
Knowing When to File Bankruptcy
While there's no hard-and-fast formula for when bankruptcy becomes a necessity, there are a few measures of financial turmoil you can use to see whether you might be ready to consider filing.
- You can just barely afford the minimum payments on your credit cards. One sure sign of financial distress is paying only the minimum amount due each month to credit card companies. Doing that causes interest to build up quickly, which increases the total debt load. Further, if your minimum payment goes up, you may be out of luck. If you're struggling to make credit card payments each month, bankruptcy may be an option.
- You're worried about mortgage payments. Whether you have a mortgage with monthly payments set to increase soon or you've recently lost income, mortgage woes can be another reason to seek the protection of the bankruptcy court. Ask your lawyer whether Chapter 13 bankruptcy might help you avoid foreclosure.
- Keep in mind when you take out a cash advance loan or make serious credit card charges. If you've recently (within the last 70 days) taken on new debt, this can affect what you can include in your bankruptcy petition. Why? Because the bankruptcy court specifically lists as non-dischargeable debts those that were acquired too near the bankruptcy filing date. Last-minute charges or short-term loans may appear as obligations taken on with the specific intent of having them discharged in bankruptcy - which could lead to a dismissed case and even federal bankruptcy fraud charges.
What You Can Do before You File Bankruptcy
So what else can you do before you can file your case?
- Talk with a lawyer. This isn't a requirement, but many financial experts and the United States government recommend speaking with a lawyer about your case. After all, bankruptcy is composed of complex laws and can be difficult to understand to those not trained in the field.
- Complete your credit counseling session. If you want the court to accept your petition, it's important to complete a credit counseling session with an accredited bureau before you file. This requirement was mandated by the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act.
Ask a Lawyer When to File Bankruptcy
If you're ready for a legal opinion about whether you could benefit from a bankruptcy filing, take this opportunity for a free consultation with a bankruptcy lawyer.