When should I file bankruptcy?
Lets start with the usual causes
Financing lifestyle
Buying things on credit can get out of hand
Financing lifestyle
Buying things on credit can get out of hand
Failure to get raises
Bills go up, but salary doesn't. That is pretty common
Failure to get raises
Bills go up, but salary doesn't. That is pretty common
Illness
When you're ill, you can't pay your bills
Illness
When you're ill, you can't pay your bills
Bad luck
Accidents, floods, fires, theft
Bad luck
Accidents, floods, fires, theft
Job loss
Getting rehired often means taking a pay cut, now a days
Job loss
Getting rehired often means taking a pay cut, now a days
Gambling
Yes, it's a major cause of filing bankruptcy
Gambling
Yes, it's a major cause of filing bankruptcy
In a situation where you can't pay your bills, when should you eliminate or consolidate?
. Before you spend your pension. The first think a lot of people do to pay bills is take a 401K loan or draw down their pension. Do NOT do that, because creditors cannot touch your 401K or pension. Bankruptcy laws protect your pension and 401K. No one can touch it. File before you think of using retirement funds to pay creditors.
. When you lose a good job. There is an income test for Chapter 7. So if you lose a 100K a year job, why pay the credit cards unless you are going back to work right away. If you're not back to work in 4 months, you might qualify for Chapter 7. But if you wait until you go back to work, you might not qualify, because now you make more than the median income, and your only remedy is Chapter 13 debt repayment, based on your income.
. If illness and unpaid medical bills are your problem, wait until you are better, or have insurance before using up your right to file Chapter 7. If you are working and have ongoing medical that is unpaid, often Chapter 13 is a good idea, because it keeps your Chapter 7 option open.
. If you simply aren't making enough money, you should take my debtor education course, get out of debt, and learn how to budget. It just may be impossible to pay your debt on the salary you are making.
. Don't consider bankruptcy unless you can eliminate at least $10,000 in debt. It is just dumb to file any bankruptcy because you have a lawsuit for $4000. Settle it yourself. Save your bankruptcy for a real disaster.
***If three or more of the following apply to you, you should see a bankruptcy lawyer now.
***If more than 5 of the following apply to you, you should have already seen us 3 months ago!!!
My debt is over $10,000 not including a car or house.
My payments are over 25% of my take home pay
I am frequently late on my payments
I pay 20% interest on my debt
I buy necessary items like food or clothing on credit
I frequently get cash advances
I am thinking about getting a loan to pay other loans
I have a lawsuit and over $10,000 in other debt I can eliminate
Collection agencies are calling me
I am 'robbing Peter to pay Paul'
My balances are not going down even though I make payments
I have been turned down for more credit
Payments are more than 1 month behind on more than one bill
My driver's license is suspended because of an accident
I am working but paying other debts so I can't afford car insurance
My mortgage or rent is always late, or is behind
We are getting divorced and have too many bills to pay
I have medical bills over $20,000 that are not insured
There is a garnishment or wage assignment on my check
I owe income taxes I can't pay now
My car is worth much less than I owe
I have no savings
If none of these apply to you, congratulations!! You are living the American Dream.