Money troubles come to most of us at one time or another. If you’re lucky, the severity of your financial trouble will not be too bad, but that is not the case for everyone. In some cases, in order to fix your bad financial situation, your best course of action is to declare bankruptcy even though this comes with its own consequences. Declaring bankruptcy is no small matter, and should be researched and considered thoroughly before you proceed. To help you understand when bankruptcy is needed, here are 5 scenarios under which you might want to declare bankruptcy.
Credit Card Debt
Credit card debt is one of the most common forms of debt in the United States. Credit cards make it easy to pay for things in the moment, with little regard towards the future. Because of this, many people pile up a large amount of debt on their credit cards, and due to high interest rates, are unable to get a handle on it. Credit card debt continues to pile up, making your situation even worse, and it seems like there is no viable path to getting out of it, short of robbing a bank.
In a situation like this, you will want to look at declaring bankruptcy. Doing so allows you to avoid paying your debts now, but instead stretches them out over a period of time.
Debt After Retirement
While retirement can be great – less stress, more time for the things you enjoy – it also usually comes with a decrease in income. If you have debt around the time you retire, this can make it even harder to pay off, since you will be living on a fixed income. One solution you can consider in this situation is bankruptcy. More and more seniors are looking to this option when trying to resolve their debts, but there are a few things that you should consider before proceeding – such as are your social security and retirement funds protected.
Another common form of debt in the United States is from medical expenses. While the Affordable Care Act has helped millions of people get health insurance, this does not always cover every single expense. Many people need expensive operations, or long-term care, but do not have the insurance or funds to pay for it at the time. This leads them to taking out a loan, which then puts them in debt. Medical procedures are not cheap in the United States, so the debt that accumulates is quite substantial. Bankruptcy can help someone dealing with medical debts get a handle on the situation, and resolve those debts in a better way.
Business Is Affecting Your Personal Finances
When businesses don’t perform well, it is often the case that the owner will dip into their own personal finances to try and rescue it. This can start off small, but over time accumulate to a large debt. And, as the owner of the business, you are likely not receiving an income if you are trying to save the business, meaning it becomes even harder to pay off the debts. In a situation like this, where your business is negatively impacting your personal finances, declaring bankruptcy for your business might be in order. Once you have your bankruptcy plan of action, you can take the necessary steps to secure your own situation, and then move onto salvaging your business.
Lastly, if your home is at risk of a foreclosure, bankruptcy may help. The last thing you want to happen is that you lose your home, so you will want to take any action that you can to prevent this. Consider the amount of debt that you have, and then look into your different bankruptcy options. While filing bankruptcy is not a desirable route to take, it is usually preferred over losing one’s home.
Explore Your Options
There are several different kinds of bankruptcy filings that you can take, and it is important to know the difference before you proceed. By knowing about the different types of bankruptcy, and when they are used, you can make the right decision for your business or personal finances.
Bankruptcy is a scary word, but under the right circumstances, it may be the best option for you. If you are unsure, you should talk to a bankruptcy lawyer and see if bankruptcy is the route that you should take.