When is it Time to Consider Bankruptcy?

If you're like most people, when you borrow money or put something on your credit card, you have every intention of paying it back. But sometimes, life takes an unexpected turn. Maybe you are recently divorced, lost your job or got in an accident and were unable to work for several weeks or months. Regardless of the reason, something happened and now you're unable to keep up with your payments.

If you've found yourself struggling with debt, you're probably doing everything you can do avoid asking someone else for help. And if you're like many people, you're also trying to avoid filing for bankruptcy.

Many people have an idea of what bankruptcy looks like based on stories they've heard through the media. When you think of someone who is filing for bankruptcy, you probably think of a person who doesn't have a job, racked up credit card debt through frivolous spending, and is now forced to ask family and friends for money to help pay off their debt. Nothing could be further from the truth.

The reality is that very few bankruptcy cases actually look like this. If you're in a situation where you're in over your head with credit card debt, medical bills, or other types of debt, it's important to know that bankruptcy may be an option. Bankruptcy isn't for everyone, and there may be ways to pay off your debt without filing for bankruptcy. Here are four signs that you should consider speaking with an experienced bankruptcy attorney.

Debt Collectors Won't Stop Calling You

When the phone rings, do you fear that it's a debt collector calling you – again? If creditors or debt collectors keep calling you trying to collect on a past-due debt, bankruptcy can help stop the calls. However, you shouldn't file bankruptcy solely for this reason. On the other hand, if you are at the point where debt collectors are filing lawsuits, bankruptcy may be a good option for you. When you file for bankruptcy, an injunction called the automatic stay goes into effect immediately. This is an important aspect of bankruptcy because it stops most lawsuits filed against you and protects your money from creditors, thereby providing the debtor the opportunity to take a step back and breathe normally. The automatic stay also provides relief from debt collection calls.

You're Thinking About Taking Money out of Your Retirement Fund

Are you tempted to take money out of your retirement plan to pay back some of your debts? If you're younger, you may think that taking money out of your retirement fund is no big deal. After all, you have years to pay it back. However, this is a dangerous mindset to have. Your retirement plan was never intended to be a personal bank account. Borrowing against your retirement can be more expensive than traditional financing. Additionally, the older you are, the more you risk by taking money out of your retirement plan.

In Florida, retirement funds such as IRAs and 401ks are protected during bankruptcy, and therefore, taking money out to pay back your debts may have a negative impact on your retirement in the future. Before taking money out of your retirement plan, consider meeting with an experienced bankruptcy attorney to discuss some of your other options.

You're Behind on Your Mortgage or Vehicle Payments

If you're falling behind on your mortgage payments, you may be nervous that foreclosure isn't too far away. Although bankruptcy doesn't discharge a mortgage or secured vehicle lien, it can provide you with ways to help manage them. If you decide to surrender your home or vehicle, you can eliminate your financial liability for these assets.

You're Overloaded With Credit Card Debt

If your credit card debt is piling up and you're still only able to pay the minimum payments on your cards because you're not making enough money to reduce your credit card debt, it may be time to consider bankruptcy. When you meet with an experienced bankruptcy attorney, they'll be able to discuss with you whether bankruptcy is the best solution for your situation. They'll also be able to explain how bankruptcy can give you a fresh financial start and how you can move forward following bankruptcy.

Bankruptcy isn't right for everyone, but if you're in over your head and can't find a way out, you should at least meet with an experienced bankruptcy attorney to discuss your options.