It’s not at all uncommon for people to find themselves in a state of financial instability, but when debt begins to accrue to unmanageable levels, it’s important to find a way out before creditors take legal action.
People can fall into debt for any number of reasons that can eventually become so substantial that one of the only escape routes is to file for bankruptcy. Just back in 2013 there were an estimated 1,071,932 bankruptcy filings in the United States. But how can you know if you should and when to file bankruptcy? Here are a few situations that might constitute a reasonable claim:
- Unemployment: There is no requirement to be employed to file for bankruptcy, and if still collecting unemployment benefits you are likely still safe considering that most of these benefits are below bankruptcy income limits. What often brings people to these situations is after finally getting off unemployment, the state demands you pay “overpaid” unemployment benefits that can actually exceed some incomes.
- Medical Bills: Debt that builds up from medical bills is one of the most common reasons people file for bankruptcy help with approximately 2 million people in the United States filing as a result of medical expenses just in 2013. Fortunately, most bankruptcy claims can wipe out the bills or unsecured debt with no limit on the discharge of medical bills.
- Marital Problems: Financial problems can put enormous stress on a marriage. Knowing when to file bankruptcy can in some cases even save a marriage. However, for those planning on getting divorced, one of the most significant issues in many dissolution cases is the division of debt between spouses. A bankruptcy can eliminate this issue in order to remove at least one of the burdens entailed with divorce.
Generally, a typical bankruptcy can take around six months to complete, although this number can vary according to different types of bankruptcy. Knowing when to file bankruptcy does not only entail being the correct situation, but also planning for the next step after the creditor is paid off. To ensure you have properly handled a debt situation, getting advice and help with filing bankruptcy from an attorney, in order to gain an in depth understanding of what it means to file bankruptcy, is a smart first step.