Considering filing for bankruptcy is never easy, in fact, it will probably be one of the most difficult financial decisions that one will make. Nevertheless, once the decision is made and people begin to experience the relief that bankruptcy provides, they see what it’s like to have a financial fresh start and a stress free life. But, when should one begin to consider filing for bankruptcy? If you’re unsure, here are some signs that will help you decide on whether maybe it is time to consider filing for bankruptcy.
You are Behind on Your Mortgage
It is surprising how many homeowners facing foreclosure wait until the very last second (mostly at eve of the sheriff’s sale) before they consider taking action. Normally, once the homeowner has defaulted on his or her mortgage payments, the mortgage holder no longer accepts mortgage payments and begins the foreclosure proceeding. At this point, there are several avenues that one can take to save their home, but unless you can pay in full the amount that you are behind (or obtain a loan modification to cure the arrears) there is no other “real” alternative to stop the foreclosure proceeding other than bankruptcy. Once you’ve defaulted on your mortgage, it is only a matter of months before your house is foreclosed. Don’t wait until the last second – if you are behind on your mortgage – begin considering bankruptcy.
Living Paycheck to Paycheck
This should not be surprising: if you are living paycheck to paycheck because you are in over your head with debt, then you are a perfect candidate for bankruptcy. For the most part, your savings should be 20% of your net income. However, if instead the money that you should be saving is going towards minimum credit card payments, you are in a lose-lose situation: Not only are you not saving money, but making the minimum payment means that you are only paying enough to keep you out of defaulting on the debt. This may sound good on its face, but the reality is that you are fixing a problem with a band-aid. The monthly interests will be compounded and, after a few months, the minimum payments will become unaffordable. In the end, you have no savings and defaulting on your debt becomes unavoidable. If this sounds like your situation, stop throwing your money down a sinking ship and begin to consider all of your options.
Using Your Credit Card to Pay Monthly Bills
If you find yourself paying your water, gas, electric, food or other miscellaneous house bills with credit cards and then only make the minimum payments, you’re not in good financial shape. Think about what you are doing: you are paying interest on all of these bills, and as explained before, it is only a matter of time before the minimum payments start increasing to an amount you can no longer afford. Picture yourself treading water inside of an enclosed glass case where water gets added every month – the impending consequence is drowning. The same is happening here: all you are doing is adding debt to more debt, and in the end, you are financially drowning.
Having to Prioritize Between What Bills to Pay
If you find yourself having to choose between paying your mortgage or putting food on the table (or as discussed above – having to rely on a credit card to pay for necessities), this is by far one of the biggest warning signs that you should begin to consider bankruptcy. Let’s face it, this is a clear sign that you are living above your means, and regardless of what you may try to do, you are headed for a downward spiral. However, you still have an option. Your best option at this point is to begin to consider bankruptcy and speak with a bankruptcy attorney that can help you make this decision easier.
At Scura, Wigfield, Heyer, Stevens & Cammarota, LLP it is our goal to make sure that when you leave our offices you feel better than you did when you walked in. We know that filing for bankruptcy is disruptive and difficult, and the representation you choose to help you navigate through this difficult decision can make all the difference in the world as to how things turn out. We are committed to helping you solve today’s challenges in a way that best sets you and your family up for a successful future. Call for a free consultation and let our experienced attorneys guide you to the right path.