For many people, the thought of filing bankruptcy is unpleasant. It makes them feel negative emotions, as they believe that filing carries some degree of social stigma. They tell themselves that as long as they manage their finances carefully, it will never be a necessity for them. However, many people who end up filing for bankruptcy are responsible adults who have achieved a significant degree of financial stability when things suddenly go wrong. They may even file bankruptcy and discharge their debts without many other people ever knowing. Even if there is a newspaper announcement about such court filings, few people review such records regularly.
It can be hard to honestly evaluate one’s circumstances when determining whether or not personal bankruptcy is actually necessary. Many people wait longer than they should because they are averse to the idea of filing and/or they can’t tell whether filing might be necessary. The following are signs that it might be time for someone to explore the possibility of filing for bankruptcy and whether one’s fears about the process are truly justified.
When a budget won’t balance
Every household has a few months or weeks when the money coming in just isn’t enough to cover all of the household expenses. However, it should only take a few paychecks to resolve that issue. If someone has to consistently make choices every month about what bills to pay or keeps accruing late payment and missed payment fees on their accounts, that is a warning that they need more than just a few months to correct their financial situation.
When creditors become aggressive
Those who consistently have more financial obligations than household revenue may have to make the difficult choice to file for personal bankruptcy when they face life-altering collection efforts. The law allows creditors to take extreme steps to collect on their debts in some cases. Some creditors, like hospitals, can place a lien against an individual’s bank account or real property. Other businesses can secure a judgment that leads to the garnishment of someone’s wages. A creditor lawsuit, a potential vehicle repossession or a possible foreclosure are all examples of aggressive collection activity that might warrant a bankruptcy filing.
The automatic stay granted by the courts can result in the suspension of pending lawsuits in addition to preventing ongoing collection activity until the courts either approve or dismiss the filing. For some people who are unsure of how best to manage their situation, seeking legal guidance and undergoing a thorough review of their budget and financial obligations may help them decide whether personal bankruptcy is the right solution for them at this time.