Financial troubles can happen to anyone at any time, even the most financially cautious individuals can be struck by an unexpected circumstance like an illness or job loss. If you are struggling with debt and are unable to keep up with your bills, you may be wondering if bankruptcy is the answer. Below are four signs that it may be time to speak to a bankruptcy lawyer about your options:
1. Your balances won't go down. Are you making payments on your debts, but the amount you owe never gets any smaller? If you are only ever making payments on interest and are not able to touch the principal amount of your debt, it may be time to consider filing for bankruptcy. As a rule of thumb, if your debt cannot be paid off in full after about three years, it is in your best interests to seek legal advice to begin working toward a solution.
2. You are using retirement funds to pay your debts. Raiding your retirement funds is essentially stealing from yourself during a time when you will be relying on your savings to get by. Whether you are considering or have already taken an early withdrawal, this is a sign that bankruptcy may be the solution you require. Paying off your loan faster through the use of your retirement funds will cost you more in the long run when you don't have those resources later on.
3. Others will suffer if you do not file. Caring for dependents like children, adisabled family member, or an elderly parent can be financially draining. If you find yourself unable to both care for your family and manage your debts, your family's well being should come first. Filing for bankruptcy can help relieve you of your debts and allow you the fresh financial start you need to continue ensuring the health of your family.
4. Your mortgage is under water. Bankruptcy can provide much-needed relief if you are upside down on your home. Filing for bankruptcy can help in thefollowing ways:
- It can help you catch up on your payments or obtain a loan modification so that you do not lose your home.
- It can erase debt that could be due after a foreclosure.
- It can eliminate a home equity loan or second mortgage.
- It can help you avoid a large tax bill from cancellation of debt income.
- It can free up money that you were using to pay other debts so that they can now be applied to your mortgage payment.
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