Although you have an obligation to pay your debts, there are times when this is not likely to happen. Recognizing this situation will allow you to take that important first step and consult with a bankruptcy attorney. The following are three examples of situations when you should consider filing for bankruptcy.
You can only make the minimum payment on your credit cards
When you are near the maximum balance on your credit card, most of your payment each month will go towards interest. If all you do is make the minimum payments, it will take a very long time to pay off your balance. Closed-end loans, the type of loans that have a specific number of payments, can offer hope. If you sacrifice for a certain amount of time, you will have your debt paid off. Credit cards are not like this. Bankruptcy may be a good alternative to making large interest payments each month.
You don't have valuable assets
If you have things of value that are not being used to secure debt, you can sell them to pay your debts, and you should consider doing this. If you have things of value, a bankruptcy judge may force you to sell them anyway. Of course, some of your assets may be exempt from a bankruptcy, so you need to be careful. There is no reason to sell them in order to file for bankruptcy. Each state has different laws concerning asset exemptions. For example, most states allow you to keep your car, but the maximum value of the vehicle varies from state to state. It is important to consult with a bankruptcy attorney to understand what you should avoid selling if a possible bankruptcy looms on the horizon.
If you are between jobs, then you probably don't have any reason to file for bankruptcy. But in those situations where you have been employed for many years doing a job that is being phased out of a particular industry or has little demand, you may need to make a career change. However, this can take time, and with less income, it may be a good time to declare bankruptcy. You don't want to spend money you don't have to service debt that you can't pay. In the short run, all you are doing is delaying the inevitable.
No one wants to declare bankruptcy, but these laws exist to help people find relief from the burden of debt. If you need to declare bankruptcy, it is important to not wait too long to declare bankruptcy. Not only are you wasting your money on debt payments, but you may be suffering unnecessary stress under a burden of debt.