Money troubles can happen to anyone, but one solution, bankruptcy, might help.
Therefore, you should understand the signs that bankruptcy could provide a path that allows you to get out of debt.
Too much debt
A total of 387,721 individuals and businesses filed for bankruptcy in 2022, and many chose this option due to excessive debt. If you have a lot of debt and cannot make even the smallest payments on your loans, credit cards or medical bills, you can encounter a big problem. In addition, even with insurance, major medical challenges may cause your medical bills to grow rapidly.
Bankruptcy can help you eliminate or reduce some of your debts, giving you a new start and helping you manage your money better.
Legal troubles coming
When creditors keep calling or sending emails or letters, it can become stressful. In most cases, these calls suggest that you may face legal actions, such as wage garnishment, losing your home or your other belongings, including your vehicle. During the bankruptcy process, these creditors cannot contact you or pursue legal action.
Not enough income
If you do not have any savings for unexpected things, including car repairs or medical emergencies, you might end up with even more debt. This is especially concerning if your income is stagnant, resulting in a shortage and inability to pay your bills.
These challenges can cause your credit score to drop due to missed payments, the inability to pay loans back or a high credit usage ratio, causing difficulty acquiring credit in the future. Bankruptcy helps you develop a plan to address debt and increase your savings, whether your income increases or not.
Bankruptcy is not the right answer for everyone. Do your due diligence to determine if this is the right path.