Categories: Business

Signs You Need To File For Bankruptcy

If you are struggling to pay your bills, hardly making ends meet, using your savings, or not contributing into your emergency fund, then perhaps you need to file for bankruptcy. Here are some warning signs to look for

IMAGE: PEXELS

1. You’re Behind On Payments

It’s a warning sign when you are behind on payments for your rent, car loans, or mortgage because you are in no position to pay your outstanding dues/bills. It is rare when your lender is lenient with you for his payments. Besides, it is naïve of you if you think that a lender will offer you some time to make outstanding payments. In reality, nothing happens like that in the financial markets. You have to pay your bills on time.

Otherwise, you are at risk. You will not be able to take loans in the future, and it will also have a negative influence on your credit score. However, in some situations where you have a valid reason for not paying on time, then it is feasible that your lender might allow you an extended time limit. In case you don’t get any help from your lender, you need to think of viable alternatives like filing for bankruptcy.

2. You Desire A Consolidation Loan

When you are intending to take a consolidation loan, it means you are in a bad financial situation. Although it is a reasonable idea to seek external help from a debt management company, in most of the cases, the experience is a whole lot different. Typically, it is observed that a debt management agency gets to receive a large portion of your payments as its fees. As a result, the debt management provider pays back only a little to your lenders or creditors.

It means you will have to keep paying your debts for quite a long time. Therefore, it is smart of you if you can hire a bankruptcy lawyer rather than hiring a debt consolidator. Your attorney will guide you to file a bankruptcy case depending on your current conditions, financial status, and requirements.

There are types of bankruptcy segregated by chapters. An experienced attorney has the knowledge to properly guide you to which chapter best fits with your debt issues. For instance, Chapter 13 bankruptcy helps people with regular income. It offers them an effective plan to repay all of their debts.

3. You’re Being Sued By Debt Collectors

It’s an extreme warning sign when you are being sued by your debt collectors, creditors, or moneylenders. If you fail to make payments for a long time, there is a high chance you will be sued. When a debt collector’s phone calls, reminders, and letters go unanswered, he can file a lawsuit against you to force you to pay. Understandably, fighting a lawsuit can be difficult and costly.

However, filing a bankruptcy petition can offer you more legal and financial protection. Once you’ve filed your bankruptcy case, the court will issue an automatic stay against your lenders or creditors. Practically, you cannot be subjected to any additional collection actions.

4. You’re Using Your Credit Cards

Lastly, when you are using your credit cards most of the time, even for small transactions. You use them for everyday items such as for buying groceries, gas, and fuel, utility bills, TV cable & internet services, etc. For routine items, it is best to use cash or debit cards. The credit cards can help you with bigger purchases. But, if your every purchase is on credit, then you should think of filing bankruptcy.

If you are interested in even more business-related articles and information from us here at Bit Rebels, then we have a lot to choose from.