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When is it time to file for bankruptcy?

| Jun 16, 2020 | Chapter 7 |

Many people view the need to file bankruptcy as a failure, but the reality is that life happens. Unexpected medical expenses, job loss, unplanned emergencies and other factors can all contribute to debt. For many people, the debt becomes too much, and they must ask themselves, is it time to file for bankruptcy?

If you are at the point where you are unsure if it is time to file for bankruptcy or continue trying to stay afloat, it may be time to sit down and honestly consider your situation. GoBankingRates suggests a few factors to consider to determine if bankruptcy is right for you.

You are unable to pay your medical debt

According to the publication, medical debt is the number one reason Americans file for bankruptcy. Of the debtors who file because of medical debt, nearly 80% had health insurance. Medical care can easily push someone into debt from which they can never escape without the help of bankruptcy. If this is the case with you, know that you can find relief by filing. However, bear in mind that you will have to repay any new medical debt you accrue after filing.

You have no income and a lot of debt

If you recently became unemployed, you may want to give it time before you file for bankruptcy. However, if you have been unemployed for a considerable amount of time and amassed substantial debt since losing your job, filing for bankruptcy may help you stay afloat. However, bear in mind that some employers consider previous bankruptcy filings during the application process.

You are in over your head in credit card debt

Credit card debt is like quicksand. Sure, you pay the monthly minimum, but after you calculate interest and monthly fees, you barely pull ahead. If you have considerable credit card debt, it may make more financial sense to discharge it all through bankruptcy.

Another thing to consider is how you use your credit cards. If you use your credit cards to pay for necessities, bankruptcy can give you the fresh start you need to start over on the right financial foot.