When is the Right Time to Declare Bankruptcy?

Filing for bankruptcy is a major decision, and one that should not be done without careful analysis of your specific situation and possible options. Indeed, what may be beneficial for someone else may not optimal for you.

With this being said, there are some general signs that filing for bankruptcy is likely in your best long-term financial interest. Here are some indications that it is now — or very soon will be — the right time for you to declare bankruptcy:

You are Being Harassed or Sued by Debt Collectors

Filing for bankruptcy will place an automatic stay on all debt collection activity, including any wage garnishment action or lawsuits. What’s more, creditors will be unable to contact you directly by phone, email or letter. They will be legally obligated to communicate only with the court-appointed bankruptcy trustee.

You are Facing a Foreclosure

If you have debts that are secured by your home (e.g. mortgage, car loan, home equity line of credit, etc.), then creditors can seek to foreclose in the event of a default. As we have discussed previously, filing for bankruptcy will either stop or delay the foreclosure process.

You Cannot Repay your Debts

Everyone wants to repay their debts. However, if you find yourself unable to cover what you owe — despite your best efforts to reduce expenses, increase income, and negotiate with creditors — then filing for bankruptcy is likely something you’ll need to do in the very near future. Otherwise, the financial hole that you’re in will only get larger, deeper, and more difficult to climb out of in the future.

You Cannot Cover Your Basic Living Expenses

Regardless of what has happened in the past, if you simply cannot meet your basic living expenses now — e.g. keeping a roof over your head, buying groceries, paying for car insurance and gas so that you can drive to work, and so on — then filing for bankruptcy now instead of later is likely the right decision.

The Bottom Line

The idea of “going bankrupt” has a shameful and embarrassing stigma attached to it, which is why many people avoid filing — even when it is clearly in their best financial interest to do so. If you feel this way, then what you need to know is that bankruptcy is NOT a moral judgement that declares you “guilty of mismanaging your money.” Bankruptcy is a legal protection that is fundamentally designed to help individuals (and businesses) reset their financial picture, and create a stable, strong and sustainable financial future.

Learn More

If you are facing unsustainable and constantly growing debt, then contact the Law Office of Charles H. Huber today. We will give you the facts you need to make a smart, safe decision on whether filing for bankruptcy is in your best long-term interest. Our experience is your advantage!