Determining Whether Bankruptcy Is the Right Option

Posted on in Personal Bankruptcy

Illinois bankruptcy attorney, Illinos chapter 13 attorneyRecognizing and admitting financial defeat is never easy. Acceptance really is the first step in the quest for positive change in your financial life. Just because you must come to terms with financial disappointment does not mean complete financial failure, however. While the mere thought of bankruptcy is enough to send anyone into a panic-induced spin, the reality is bankruptcy can and often does have a bright side in the long run, when examined carefully beforehand and chosen wisely.

Three Signs It Is Time to Throw in the Towel

In a perfect world, bankruptcy would be avoided by establishing and maintaining sound financial footing. A proper budget, eliminating debts, and living within our means is the ideal scenario. There are times when circumstances beyond our control take over and we have to know when to say when. In any case, bankruptcy should always be approached with caution and pursued as a last-resort option. Certain factors are tell-tale signs that it is time to throw in the towel, however.

Here are three common signs it may be in your best interest to declare bankruptcy:

1. You cannot make the minimum payments on your outstanding debts.

Budgeting 101 often teaches us that we need a buffer after our basic needs are paid for. This means after your rent is paid and there is food on your table, you should be able to have some wiggle room for emergencies, and then some. You should also be able to make at least the minimum payments on your current debts, such as credit cards and student loans. If you are unable to make at least the bare minimum on those bills after your living necessities are taken care of and your debt continues to mount, then you are sitting in a sinking ship. It is probably time to speak with a lawyer.

2. You have assets to protect.

If being unable to pay your debt puts you at risk for losing important possessions, such as your car or home, then exploring bankruptcy is a reasonable option to consider. Should creditors attempt to sue you for unpaid debts, they may have the right to seize or place a lien on your property, making it even harder to dig yourself out of an already deep hole. Any assets that you own outright will be the first to go. Creditors can force you to sell them to pay what you owe, and they may even be able to garnish your wages, putting your income at stake.

3. Your income is less than what you owe each month.

This sounds like an obvious sign, but it is one that many individuals ignore or put off, hoping the situation will somehow miraculously get better over time. Sometimes people attempt to pick up another job to supplement the lack of income needed to pay their monthly bills, only to discover they cannot make enough or that they are already so behind on their payments that the situation has since then snowballed, leaving them stranded. It is never too late to fix debt, but sometimes fixing debt means pursuing bankruptcy protection. Bottom line: If the income you bring in each month is less than what you owe each month, it may be time to declare bankruptcy.

Speaking with a knowledgeable Cook County bankruptcy attorney about your mounting debt can ease your worries and offer you peace of mind. If you are questioning whether bankruptcy is truly the best option for your financial situation, call the Law Offices of Eric G. Zelazny today at 708-888-2299 for a personal consultation.

 

Sources:

http://www.businessinsider.com/how-to-tell-its-the-right-time-to-file-bankruptcy-2012-8

http://www.forbes.com/2009/02/10/small-business-bankruptcy-entrepreneurs-finance_0210_bankrupt.html

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