Knowing when it is time to file for bankruptcy is not always easy. If you are like many people who proceed with bankruptcy, there will not be one single clear sign that propels you to reach out to a bankruptcy attorney. Instead, you will likely base your decision on a combination of two or more of the indicators outlined below. Below are eight telltale signs it’s time to file for bankruptcy.
How You Know When It’s Time to File for Bankruptcy
1) Phone calls from bill collectors are out of control
One of the most frustrating parts of being in debt is contending with the constant phone calls from creditors. While creditors are forbidden from calling you after 9:00 pm and before 8:00 am, it is legal for collectors to call you between the hours of 8 am and 9 pm. If you are behind on payments to multiple creditors, then it may seem that your phone is constantly ringing.
2) It would take longer than two years to pay off your debts
An effective way to decide whether bankruptcy is a viable option is to determine whether you would be able to pay off all of your creditors within a two-year time frame. You can use this simple, three-step process to assess your ability to resolve your debts in 24 months:
- Step One: Sit down and make a list of all of the dischargeable debt that you currently owe to your creditors.
- Step Two: Add up the total debt from Step One and divide that number by 24 (the maximum number of monthly payments to consider).
- Step Three: Look at your monthly income to determine whether you can afford to pay the amount calculated in Step Two each month.
If you find that the monthly payment that you calculate is far larger than your after-tax income, then you should seriously consider filing for bankruptcy. Otherwise, your debt situation could actually worsen over the next 12-24 months.
3) You are losing sleep at night
Nearly two-thirds of Americans are losing sleep due to financial strain. While minor sleep disturbances will not severely impact your ability to function, prolonged episodes of insomnia can wreak havoc on your physical and mental health. If worries about your mounting debts are preventing you from sleeping at night, then it might be time to file for bankruptcy.
4) The pros of bankruptcy far outweigh the cons
It is no secret that bankruptcy is associated with a host of unpleasant consequences. Your bankruptcy will become a public matter, enabling virtually anyone to be able to access your filing. Additionally, filing fees can cost several hundred dollars and attorney fees will also apply if you seek legal guidance. You will also be more likely to encounter difficulty securing credit in the future because your bankruptcy will appeal on your credit report.
As unpalatable as these factors may seem, they may pale in comparison to your current financial situation. If your total debt is increasing by the day because you can no longer make the required payments, the financial strain may become unbearable and impossible to resolve in under two years with your current income. When you get to this point, the benefits of bankruptcy will begin to far outweigh the cons and bankruptcy becomes a viable option.
5) Your work performance is suffering
The last thing you need when you are struggling with debt is to lose your job. But insurmountable debt can take such a heavy toll on your everyday life that your work performance may begin to suffer. After all, it can be difficult to focus on your job if you are losing sleep and creditors are constantly calling your cell phone and place of employment. If your mounting debts are interfering with your work, then you need to take action and seek professional assistance with an experienced Tampa bankruptcy attorney.
6) Creditors are garnishing your paychecks
If you fail to repay your debts, your creditors may sue you for nonpayment. And if they win in court, they can garnish your wages and force your employer to turn over a portion of your wages to pay down your debts. While federal law prohibits creditors from taking more than 25 percent of your disposable income, this type of reduction in income can be devastating. Additionally, the situation can be embarrassing because your employer will know about your financial difficulties.
7) Your creditors refuse to consider a settlement
Some creditors are willing to accept a repayment amount that is lower than the total amount that you owe. If you are unable to repay your debts to your creditors and have been unable to get them to budge on the total amount that you owe them, then bankruptcy should be an option that you consider.
8) You are experiencing depression or anxiety
People who are struggling with debt are two times more likely to develop mental health problems. Depression and anxiety top the list of mental health issues that plague people who are overburdened by debt. If not properly treated, depression and anxiety can evolve into serious health problems, such as suicide or major depressive disorder. Bankruptcy may help relieve some of your symptoms simply by eliminating the constant phone calls and letters from creditors.
Ready to file for bankruptcy?
If crushing debt is causing problems for you at home and at work, bankruptcy can offer you a new financial beginning. If you are considering bankruptcy, the best step to take is to seek the expertise of a reputable Tampa bankruptcy attorney.
During your consultation, we will outline how filing bankruptcy can put an end to the incessant collection calls, sleepless nights, and constant financial worries. We will walk you through the filing process and the discuss the many ways we can provide guidance and support to you as you prepare for bankruptcy. Finally, we are known for delivering long-term support to our clients. We look forward to helping you regain your financial footing!