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This photo illustration of an adult male looking out a rain covered window might illustrate a recent job loss, unemployment, a troubled relationship, financial or health concerns or loss of a loved one.

 The older you get, the more complex your finances become.  When you’re young, your biggest financial concern is whether or not your allowance will cover that new toy you want.  As a teen, there’s a used car you have your eye on so you get a job bagging groceries to pay for it. Fast forward to student loans, rent, new jobs, car loans, marriage, children, investments, more student loans, and retirement, it’s no wonder that it’s so easy to find yourself saddled in debt.

Everyone has some kind of debt to pay and for most, it’s manageable.  For many, however, debt has become a dark cloud that they can’t get out from underneath on their own.  Bankruptcy may be a solution but how do you know it’s the right solution for you? Here are some indicators that it might be time to consider it:

  1. You’re making minimum monthly credit card payments.  If you have a $5,000 balance on a credit card with a 15.9% interest rate and you make the minimum monthly payment (4%) each month, it will take you 126 months―10 and a half years―to pay it off.  You will have paid $7,274.35 for that $5,000 balance.  Of course, you’ll only have it paid off in that amount of time if you make no further purchases on the card and aren’t charged any late fees.
  2. You’re underwater with your mortgage.  This means that your home is worth more than what you currently owe and it means that selling your home for something cheaper and using the proceeds to pay down your debt isn’t an option.
  3. It would take more than 5 years to pay your debt.  If you look at your total debt and monthly payments, how long will it take you to pay them off?  Are you paying as much as possible to pay down your debt?  Can you work a side job to pay it down?  If you’re doing as much as you can to pay your debt and it still would take more than 5 years to pay it off, you may want to consider bankruptcy.
  4. You’re behind on your mortgage.   If you are, you may be at risk of losing your home.  Banks charge fees when you’re behind and it gets reported to the credit bureaus which has a detrimental effect on your credit score.  Filing for Chapter 13 Bankruptcy may give you the ability to catch up with your mortgage payments, and while any bankruptcy will bring down your credit score significantly, you can begin the process of rebuilding your credit right away.  Once the bankruptcy is discharged, most other unsecured debts are discharged as well and your credit will be that much stronger for it.  You may also be able to “strip off” secondary and/or tertiary mortgages, aka Home Equity Lines of Credit (HELOC), from your homestead property.
  5. You are receiving non-stop calls from creditors and collection agencies.  When you stop paying your creditors, they won’t stop trying to collect their money.  Some collections agencies will even use threats and shame to get you to pay.  Bankruptcy protection stops creditors calls for all debts included in the bankruptcy immediately and there can be penalties for those creditors which don’t stop calling and/or harassing.
  6. You’ve recently suffered a devastating life event.  Most people go into debt due to something out of their control such as a job loss, death in the immediate family, or an accident that has left them with high medical bills and/or physically unable to work.  Even a divorce can leave your financial life destroyed.  These situations can leave you unable to pay your debts.
  7. You owe back taxes.  Are you unable to pay them off by borrowing money from a loved one or borrow from a bank?  Sales taxes and employee withholding taxes are not able to be discharged in a bankruptcy but older income taxes may. Though they may not be discharged, in most cases they can be managed.
  8. You’re using credit cards to pay for groceries and everyday items.  This is an indicator that you’re in a spiraling cycle of credit card debt.  You pay the minimum monthly amount due while increasing your balance charging everyday items which is unsustainable over time.
  9. You’re considering a debt consolidation/settlement company .  These may be beneficial under the right circumstances, but many charge high fees with little money going to your bills.  Because they usually require you stop paying your bills for many months to save enough for a settlement, there is also major hit to your credit report.
  10. Thinking about your debt causes you great anxiety.  For many people who get into trouble financially, there is a tendency to stick their heads in the sand rather than face the problem and their anxieties.  It’s an indication that things are out of control and bankruptcy may be the answer.  Don’t wait, get some help today.  Bankruptcy can help you save more than you think.

            Filing for bankruptcy is not a decision to be made on a whim.  It’s important to weigh your amount of debt and your ability to pay it with the effects that a bankruptcy will have on your ability to get credit, get an apartment, etc..  An expert bankruptcy attorney like those at Miller, Hollander, & Jeda can consult with you to determine whether or not bankruptcy is right for your current financial situation and if it is, they can guide you through the entire process.  Miller, Hollander, & Jeda have been helping people of Central Florida get onto a better financial path for nearly 4 decades. Call (239)775-2000 today for your free consultation and find out if filing for bankruptcy can help.