Should bankruptcy be filed is a question that many consider every day just as we have heard about the United States debt issues over the last several months. At the last minute the United States has avoided the fiscal cliff and, sadly, in doing so most people will experience a drop in their net pay check because of our Congress’ negotiated deal. The United States has the multi-trillion dollar budget and negotiating power to keep its debt revolving. As an individual, we do not have the same abilities. Often, a client wonders when a personal bankruptcy should be filed.
Although individual’s finances are very personal, there are some telltale signs that things are out of control and a person’s financial future and today’s peace of mind will be served by a bankruptcy filing. So, when should a person strongly consider bankruptcy as a personal financial strategy?
- You are paying credit cards with other credit cards. Not that you are using 0% or low interest balance transfer options to reduce your interest expenses, but when you are using balance transfer checks sent with one statement to pay a portion of the balance of another card. This is particularly the case if you are 1) unable to consolidate all of your credit card debt to one or two low interest rate cards or 2) you have more than once paid one credit card only to use the paid credit card to pay the second card. When you get to this point, it is time to consider a personal bankruptcy.
- You have mounting medical debt. Many, including this writer, have experienced the unexpected doctor visit bill, emergency room bill, surgery or some other necessary medical circumstance that results in an unexpected bill that you cannot pay. Medical providers are generally good to work with on payments, but sometimes those payments prevent paying other debts or obtaining the basic necessities of life. If the medical payments are preventing you from living your life then a personal bankruptcy may be the best option.
- You are unemployed or just recently returned to the workforce. Unemployment rates remain a high levels and the economy has not rebounded as our President has suggested. Millions of Americans remain unemployed or employed at less than what their income level should be. If you are unemployed or only recently returned to the workforce and have used your savings, debt, credit cards or your home equity to survive this unemployed time it may be time to file bankruptcy to get a fresh start to help make your future earnings yours to use as you choose versus to pay for a past you did not choose.
- You are behind on your mortgage or rent payments. Many people have fallen behind on their mortgage and rent payments. Working with banks and landlords can be difficult and sometimes impossible. Landlords are always threatening eviction. Banks suggest a “mortgage modification” ask for paperwork, ask for the paperwork again claiming it was not received, deny your modification for some inexplicable reason and then begin or commence foreclosure proceedings. When you have found the process or working to keep your home beyond your control and want to keep your home and catch up your payments and possibly reduce the loan to what your house is actually worth, a personal bankruptcy may be the perfect option to get control of your housing debts.
- Your debt payments exceed your take home pay. Personal finance experts are constantly suggesting that households need a budget. When you have a budget or just realize that to make your minimum payments you need to bring home more money now is the time to consider a personal bankruptcy. Eliminating debt frees up your income to keep focused on building your future and have a positive cash flow budget is an outstanding and freeing feeling.
- You are the victim of a recent divorce. Divorce rates in the United States are above 50%. Going from a two income household to a one income household and, additionally, finding yourself with marriage debt, attorney fees, debt needed to keep yourself afloat during a divorce process or medical bills all become difficult to deal with on a single income. Enter your new single life or a new relationship without being straddled with the debt of your past by utilizing the bankruptcy process for a fresh start.
- You are unable to pay your bills before their due date. When you find yourself making late payments, sweating about whether the check will clear before you have the money in the bank or even find yourself sending an unsigned check to buy time. Bankruptcy will give you the peace of mind to know those checks will clear when you do not have to worry about medical debt, credit card bills and other debts eating up your money every month.
- You have to use credit cards for every day expenses because of the required interest payments on credit cards. Cash flow dictates what you can and cannot spend your money on. The interest charged on credit cards can result in high minimum monthly payments and when it takes as much of your income as you can spare to make those payments and never feel like you are getting ahead then now is the time to consider personal bankruptcy before the debt mounts to a point that you are unable to keep up.
- Your credit score is suffering from debt and collection accounts. Many are concerned with their credit scores and how bankruptcy will affect their score. When your credit score is suffering because of your debt and collection accounts, then bankruptcy may actually help to improve your score or at least provide you the opportunity to assist your score in going up so that you will have financial freedom in the future.
This is certainly not an exhaustive list of reasons of when a personal bankruptcy should be strongly considered but a simple list of examples of when you should consider bankruptcy. Bankruptcy is a personal decision that many find difficult to make, but are very happy when the decision is made and your financial worries are a thing of the past.
The bankruptcy process was created in the United States Constitution. There are references to canceling debt in the bible. Thousands of Americans get help with the protections of the Bankruptcy Code and get their lives back. Reducing stress, eliminating collection phone calls, eliminating eviction and foreclosure threats and get a chance to control of their finances.
Welcome to Wischmeyer Law Office where we will help you decide if a personal bankruptcy makes the most financial sense and assist you in getting control of your financial life. Give us a call (317-429-0210) or fill out the form on this page to discuss your financial situation and whether a bankruptcy makes the best financial sense for your situation.