Declaring bankruptcy may sound scary, but it can be the right decision in certain circumstances. If your finances are spiraling out of control, bankruptcy may give you peace of mind and save you money.
However, filing for bankruptcy is a monumental decision that is not for everyone. If you are having trouble deciding whether you should pursue bankruptcy, do not worry. Here are some signs that your financial situation is unmanageable and bankruptcy may be the best option.
You use credit cards for everyday essentials
Paying for gas and groceries on your credit card because you do not have any cash available is a major warning sign. You may do this because your entire check goes to your debt payments. However, this pattern will only cause you to develop more credit card debt.
You are paying a credit card off with another one
If you find yourself paying off credit card debt by transferring a balance or using a cash advance from another card, realize this is a futile tactic. This is only a way to stall the situation until it gets worse. If you are doing this on a regular basis, your debt is likely going to skyrocket if it has not already.
You are taking funds from a retirement account
The money in your retirement account is there to give you a stable future. If you withdraw that money now, you are depleting your funds for later in life. Premature withdrawals from retirement accounts also come with hefty tax liabilities, which may only result in more debt.
You face the threat of wage garnishment
If you are seriously delinquent with a lender, it may get a court order to take money from your paycheck. This is called wage garnishment and is often the last straw. If you get a warning that one of your lenders is going to try to garnish your wages, bankruptcy can stop the process from moving forward.