How do I know when it’s time to declare bankruptcy?


Managing personal finances has continued to become a larger challenge for people all over the country. This has been made even more difficult over the past year as the global pandemic has led to a massive cutback in consumer spending and the unemployment rate has increased faster than it ever has in the past. For those that are struggling with their personal finances, finding a way out of the hole is very important. One option that a lot of people have is to declare bankruptcy. While this is a very big personal financial decision that will impact your financial life for years, there are situations when declaring bankruptcy could make the most sense. 

Debt Collectors Keep Calling 

One sign that you should consider filing for bankruptcy is if the debt collectors are contacting you consistently. Once you start to fall behind on any bills, your creditors will start contacting you and can threaten a variety of actions including penalties and higher interest rates. Eventually, your debts may be sold to third-party collection agencies and debt collectors that could drive up the amount you owe even more, which could make getting out of debt harder. 


You Keep Taking Out More Loans 

When facing a financial hardship, it is also common for someone to start incurring even more debt in an effort to get out of trouble. Even those that are struggling could still qualify for some high-interest credit cards, payday loans and auto title loans. These loans are extremely expensive and could put you even further behind, even if they seem to solve a short-term financial problem. When you declare bankruptcy, you can restructure all of your outstanding debts, which will help you get into a better financial position while avoiding the accumulation of high-interest loans.  

You Could Lose Your Home 

Another situation when declaring bankruptcy could be the best option is you are in a position where you could lose your home in the near future. For those that are falling behind on loan payments and other bills, delaying mortgage payments could be the best way to free up some personal cash flow. Unfortunately, if you start to fall too far behind on payments, you could risk losing your home to foreclosure. 

If you choose to file Chapter 13 bankruptcy, you will be provided with an opportunity to file for bankruptcy while also saving your home. This could help you to restructure all of your debts to create a payment that is more reasonable for you. This could help you stay in good standing with your mortgage lender, who also may be willing to offer a mortgage modification to you. 

Depleting Retirement Savings 

In today’s environment, a lot of people find themselves in a position where they are running out of their personal savings and emergency reserve. For many, the next logical step to take is to start tapping into their retirement accounts. Unfortunately, this means giving up your long-term savings while also having to pay penalties and excess taxes. ?If you choose to restructure your personal finances by declaring bankruptcy, you may be able to hold onto your retirement accounts, which could benefit you greatly in the future. 

Legal Representation when Filing for Bankruptcy 

There are clearly many situations when filing for bankruptcy could be the best option for you and your financial future. For those that are in the area, hiring an Indianapolis bankruptcy lawyer is a necessity whenever you are going to file your taxes. There are several reasons why you should hire an attorney for this process.  

Bankruptcy Consultation 

One of the reasons to hire an attorney when you are going to declare bankruptcy is that you will receive a full consultation. Knowing whether or not you should declare bankruptcy can be a complicated process. The bankruptcy lawyer will be able to help you assess your situation to determine whether a bankruptcy declaration is your best option. If you choose to move forward, they can also explain what the forthcoming process will be, what the short and long-term impact on your life could be and a variety of other factors that will be involved in your decision. 

Attorney Will Handle the Whole Process 

The process of filing for bankruptcy can be complicated and having an attorney handle it for you is very helpful. The attorney will be able to handle the initial filing, which will include informing all creditors and notifying them to stop their collection processes. They can then handle all discoveries with the creditors as well as the negotiations and deliberations with them. This will ensure that everything is done the right way and no mistakes are made, which could invalidate the process.  

Attorney Will Look Out for You 

Most importantly, the bankruptcy lawyer will look out for you through the whole process. During these proceedings, all of the creditors will be focused on recouping as much of their debt as possible. Your lawyer, on the other hand, will have your best interests in mind and will work hard to get the best outcome for you possible.?  

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