Some people wonder just how badly in debt they have to be before they file for chapter 7 bankruptcy. The signs of financial troubles are not that easy to distinguish, however. What might be a lot of problems for some would not bother others. Instead of focusing on a dollar amount of debt to make your decision, take a look at the below list of signs before you make that important move.
- Are your debts far higher than your assets? To help you figure out where you stand, create a fiscal worth statement. That is a list of your debts along with a list of what you own. Consider bank accounts, real estate, and more. Be sure you use only the equity when calculating the worth of your home, vehicles, and other assets. If you have as far more debt than assets, you are not likely to be able to pay off all of your debt without winning the lottery.
- Are you being hounded by debt collectors? Once you fall behind, creditors won't let you forget it. They can call you, email you, text you, and sent you letters reminding of exactly how far behind you are on your credit card or other bills. You can bring an immediate stop to that activity by filing for chapter 7.
- Do you have a lot of credit card debt? If so, chapter 7 may be an excellent tool for removing those debts. Credit card debt is unsecured, which means it's not dependent on any personal property. A home and vehicle, though, are secured debts.
- Are you being sued? Collection agencies will hound you and then file suit against you. Once a judgment is handed down, you will also have to court costs, legal fees, and more. Your wages could be garnished and your property could have liens placed on it as a result of the judgment.
- Are you about to lose your home and/or car? You can put a hold on foreclosures and repossessions by filing for chapter 7. There is always a chance you can get caught up on those bills and avoid losing property by using the funds you were sending to your credit cards.
- Are you paying the minimum only on your credit card bills? Those payments won't pay off the debt for years and the interest will eat into most of your payments.
- Are you using your credit cards to pay for food, fuel, and other necessities? A long-term solution like bankruptcy might be the answer.
If you answered "yes" to some of the above, speak with a bankruptcy attorney to find out what a filing could do for you.