Filing for Bankruptcy: How Do You Know When It’s Time?

Are you living paycheck to paycheck, working on saving money, but every month, something comes up to thwart your plans? Your car needs new tires or a battery. Your children need money for an extracurricular event at school. You may feel overwhelmed, like you have fallen in a hole so deep you will never find your way out. Filing for bankruptcy may seem like the last thing you would think of doing. However, here are some signs that indicate it may be time for you to file.

  • You avoid answering your phone out of fear it may be a bill collector. You know that creditors do not call until accounts are at least 30 days past due, so this is a big clue you are underwater with debt.
  • Your bank account is often overdrawn.
  • You have no savings account so no funds are available for an emergency.
  • You are maxed out on your credit cards and pay only the minimum payment every month.
  • You are unaware of how much you actually owe, but just assume it is too much.

These are some indications to a bankruptcy lawyer that it may be time for you to file for bankruptcy. After filing, many of your debts will be discharged, or erased, after you file for bankruptcy so you will no longer owe them. Before you file, you should be aware of what Chapter 7 and Chapter 13 bankruptcy can do for your debt.

How Can You Benefit From Filing Chapter 7 or Chapter 13 Bankruptcy?

If you are experiencing serious debt issues, bankruptcy can provide a financial fresh start. Some of the situations in which filing for bankruptcy can help include:

  • Credit card and other unsecured debt. Bankruptcy is exceptionally effective at eliminating credit card debts: One of the things filing for bankruptcy was specifically designed to do is wipe out credit card debt and other unsecured debt.
  • Any collection agency debt and harassment. Bankruptcy can stop creditor harassment such as threatening to foreclose your mortgage or repossess your car. If creditors are harassing you with phone calls and letters, however, there are less complicated ways to stop it.
  • Certain types of liens. There are actions you can take during your bankruptcy case to avoid creditors repossessing your property. A bankruptcy attorney can advise you on this process.
  • Student loans. In certain circumstances, student loans may be eliminated or payments can be delayed. When you file for Chapter 13 bankruptcy, an automatic stay is put into place that prohibits most creditors, such as student loan lenders, from collecting their debts. This also allows you to delay your payments or even reduce them.
  • Tax debts. You can discharge tax debts in bankruptcy if the taxes are income taxes, the debt is at least three years old, you filed a tax return and you pass the “240-day rule,” meaning the income tax debt was assessed by the IRS at least 240 days before you filed for bankruptcy.
  • Other circumstances where bankruptcy can help include past due utility bills and rent, personal loans, medical bills, charge accounts with department stores and tax debt that’s more than three years old.

How Bankruptcy Lawyers at Brock & Stout Can Help

While these are common instances where bankruptcy can help you, only bankruptcy lawyers will be able to tell you if filing for bankruptcy is the correct debt relief for your situation. Every case is different, so you need the advice of an experienced attorney. If it is decided that filing for bankruptcy is the right solution, you can expect a bankruptcy lawyer at Brock & Stout to advise you on things such as:

  • What you can expect during the bankruptcy process.
  • What type of bankruptcy you should file for.
  • How you can use bankruptcy to your financial advantage.
  • What you can do to make the filing process go smoothly.

A bankruptcy lawyer will review your case and advise you on the best approach for your situation. To learn more about how bankruptcy can help you and to see if filing is the right solution for you, call Brock & Stout for a complimentary case evaluation with an experienced bankruptcy lawyer at our Montgomery, Dothan or Mobile office.