Bankruptcy is a powerful financial tool for those having difficulties paying off their personal debt. A successful bankruptcy filing will result in the discharge of someone’s unsecured debts.
Depending on the type of bankruptcy an individual files, they may need to sell some property to pay off their creditors or make several years of structured payments prior to the discharge of their remaining debts. Frequently, those considering bankruptcy will put off filing until they absolutely cannot wait any longer because they would prefer to avoid filing if at all possible.
How do you know when it is the right time to file for bankruptcy?
When a creditor or lender serves you for a lawsuit
It is easy to keep lying to yourself about how you will regain control over your finances even though your debt has become an insurmountable obstacle. Some people only acknowledge that they need help when they face litigation.
If you file for bankruptcy when facing a creditor lawsuit, the courts will typically dismiss the lawsuit pending the resolution of your filing thanks to the automatic stay on collection efforts.
When you face foreclosure or repossession
If you have missed several motor vehicle payments, you can wake up one morning to find your vehicle repossessed and gone. When you miss mortgage payments, you will eventually get notice in the mail that the lender may pursue foreclosure.
The vehicle or home is the collateral property for the loan, and if you do not act quickly to protect it, you could lose whatever you have already invested in those assets. Bankruptcy will give you temporary protection against foreclosure or repossession and may also help you negotiate more favorable terms on your financial obligations.
When you have to pick what bills to pay
Even before a creditor threatens to sue you or your vehicle is at risk of repossession, you may recognize that your financial obligations are beyond what you can manage. When you have to start borrowing from one lender to pay the other or choosing which bills to pay each month, eliminating some of your debts may be the easiest path forward.
Filing for bankruptcy when your debt is out of control could be the simplest solution with the best opportunities for rebuilding your credit. If you need help navigating this process, Quinn Law Firm can help. Call us at 814-806-2518.