Let's face it: No matter how much money the average person has coming in, it always seems like there's too little. If you experience a sudden decline in your income due to a job loss, layoff or reduction in hours, the financial situation in your household can get very serious, very fast.
Filing for bankruptcy, however, seems a bit extreme to most people. Is it really necessary? Should you maybe see if you get over this unfortunate financial slump in a month or two, first? How do you know if it's time to call it a day and file for Chapter 7?
Here are some signals that you need to take action sooner, rather than later:
- You've already pulled from your home equity: If draining the equity in your home was a desperate attempt to stay afloat instead of an opportunity to consolidate all your bills, you may now be juggling credit card debt on top of your loan, your mortgage, your car payment and more.
- You've already missed a number of payments: If you've fallen behind on a lot of your credit cards and other debts, you may never be able to dig out of the financial hole you are in without some drastic measures.
- You're worried about losing your home: If foreclosure is a real possibility, you can't afford to delay action any longer. Filing for bankruptcy may or may not actually save you from foreclosure, depending on your situation — but it will likely forestall the process and make it easier to figure out what you should do next.
- You're stressed-out and miserable because creditors keep calling: If you can't look at your mail, answer the door or pickup a call on your phone without feeling sick with dread, bankruptcy can provide you with near-immediate relief from creditor harassment.
If you think it's time to file for bankruptcy, talk to someone who cares about your situation. It's time to get an outside perspective about your legal options.