When you borrow via a loan or credit card, you intend to pay it back. Unfortunately, that does not always work out.
You may have trouble making payments because of the following:
- Job loss
- Reduced hours
- Medical bills
- Poor budgeting
No matter the reason you end up in debt, you are likely looking for a solution. But the one that sounds scary–bankruptcy–may be the best option. Here are a few reasons to consider filing for bankruptcy.
Nothing is getting better
If you keep making payments but are not seeing your balance go down, this is an indication that more urgent action is necessary. Maybe you are even seeing the balance increase. If you cannot afford to pay back your debt on your own within the next three years, you should look into bankruptcy. The same is true if you cannot even make the minimum payments on your accounts.
You are withdrawing retirement funds
Are you feeling the temptation to make early retirement withdrawals? If you are already retired, are you using funds to cover your debts? If you are tempted to or are already relying on retirement assets to manage your debt, you should think about bankruptcy instead. Raiding your retirement is one of the riskiest financial moves you can make. Not only are you stealing money from your future self, but you may face penalties and fees too.
Your mortgage is underwater
If you are upside down on your mortgage, bankruptcy is one viable solution. By declaring bankruptcy, you may be able to catch up on payments, negotiate a loan modification, erase debt, free up money and save your home. Before caving into a short sale or foreclosure, consider the benefits of bankruptcy instead.
Consumer bankruptcy is a useful tool for getting out of overwhelming debt. If you find yourself in financial trouble, you should not feel ashamed or afraid of considering bankruptcy.