Bankruptcy isn’t the right choice for everyone. Often, credit card debt and medical bills are temporary debts that will be repaid and forgotten in a matter of months. These debts might be stressful, but they aren’t overwhelming. In these cases, filing for bankruptcy isn’t necessary or appropriate to solve your financial circumstances.
Yet, there are other instances when filing for bankruptcy isn’t just a good option, it’s the optimal choice. As our team at the Law Office of Michelle Labayen discussed earlier this month, bankruptcy can help you improve your financial future. What are five signs you should be considering bankruptcy over other debt and repayment options?
#1: You Are Using Loans to Pay the Bills
Loans are a helpful and necessary financial tool to pay for higher education or make a major purchase. It is even helpful to your credit score and financial stability to incur and successfully repay certain loans, such as a student or car loan. For most of us, we couldn’t afford these crucial purchases without financing.
In contrast, you shouldn’t need a loan to pay your monthly expenses. If you are co-opting loan money to keep the lights turned on and water running in your home, it means your expenses far outweigh your income. It also isn’t sustainable to use loans in this manner. Whether you borrowed money from friends, family, or a bank, when loans are needed to cover your monthly costs, it’s a sign that filing for bankruptcy is needed.
#2: You Can’t Stop the Creditor Calls
When asked what is the most stressful aspect of debt and missed payments, the majority of New Yorkers say it is the creditor and debt collection phone calls. If you are two or three months late on credit card payments, loan installments, or other bills, the collection calls from creditors will begin. These attempts at collection, which can consume your personal life, won’t cease until you repay the outstanding debt or file for bankruptcy.
Filing for bankruptcy in New York puts an immediate stop to creditor phone calls. Whether you decide Chapter 7 or Chapter 13 bankruptcy is right for you, creditors are prohibited from collecting debts. You have an opportunity to breathe, collect your bearings, and start on a healthier financial path.
#3: Your Debt Concerns Are Long Term
A short-term deficit in your finances is manageable. Eventually, you will overcome an injury, get a new job, or pay off a major expense. It is in these situations that an NYC bankruptcy attorney is likely to suggest an alternative to bankruptcy or credit counseling. In stark contrast to these temporary financial concerns and crises, a long-term or ongoing issue with cash flow or income is more likely a time for bankruptcy.
Filing for bankruptcy is specifically designed for the financial situations that are insurmountable. It is meant for complicated and overwhelming debt and outstanding payments that can’t be solved in a few months or by cutting some costs. How do you know where your financial circumstances fall on this sliding scale of financial crises? A bankruptcy lawyer can provide insight into your circumstances and options.
#4: You Could Lose Your Home
You likely have a number of assets and possessions important to you and your family, but your home is the biggest. Your primary residence offers a sense of safety and security to your family. If you could lose your home to foreclosure because of outstanding mortgage payments or other debts, it is time to consider filing for bankruptcy in New York.
#5: You’ve Spent All Your Savings
Of course, there are appropriate uses for your savings. These funds should be banked until needed for kid’s college tuition or costs during your retirement. You don’t want to spend your savings on utility bills and credit card payments. Depletion of your savings for household costs and regular expenses is a sign that filing for bankruptcy could alleviate your financial difficulties.
If you are experiencing one or more of these stressful and warning signs, then it is time to talk with an NYC bankruptcy attorney. At the Law Office of Michelle Labayen, we know filing for bankruptcy is a major decision that shouldn’t be taken lightly. Therefore, we promise to fully and thoroughly assess your financial situation, before recommending bankruptcy. To meet with lawyer Michelle Labayen in a free consultation, simply call our office at (212) 381-6083.