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May 12, 2018

Situations When You Should Consider Bankruptcy

In most cases, if you can pay back your debt, it is worth it to do so. Bankruptcy can a scary process for an individual to consider. If you are on the verge of bankruptcy, you can dramatically change your financial situation by paying down debt and seeking bankruptcy alternatives. In these scenarios, try to pay everything back. In other cases, you might have to consider bankruptcy as an option. There are certain times where bankruptcy can work to improve your overall situation. In this post, we will cover situations where bankruptcy could be considered.

Sometimes, you have to be realistic about your earning potential and ability to pay back debt. If you are already working a second or third job, then you probably are at your limit. Anyone who works more than one full time job can get burnt out. Moreover, the struggle can get amplified if you are still unable to pay bills, debt or essentials. At this point, you might have to make a realistic assessment about your future earning potential and consider a way to get out other than working more.

Workers' Compensation Claim Has Been Denied

If you were injured on the job, chances are you are relying on your worker’s compensation claim to kick in to make ends meet. But what if your workers' compensation claim has been denied? According to a recent report by CareerBuilder, seventy-eight percent of full-time workers said they live paycheck to paycheck, up from 75 percent last year. Medical bills, household bills and living expenses can rack up quick if you don’t have a source of income. If it’s going to be while before you can stand on your own two feet again financially, filing for bankruptcy might be a viable option.

Medical Debt from Healthcare Bills

The cost of healthcare illness can be traumatic to a family emotionally and financially. If you or someone else in your family has been treated for an accident or diseases, there are certain cases where the medical bills are not covered. As a result, the family is stuck with thousands of dollars in medical bills that they cannot pay. Furthermore, this situation can be worsened if the primary earner in the household is unable to work or earn as usual. During these hard times, bankruptcy could be a solution to dealing with unsurmountable medical bills.

Your House Is Getting Foreclosed On

In the event that your house goes into the foreclosure process, bankruptcy might help you keep your home. If you file for bankruptcy during the foreclosure process, it could stop lenders and creditors from continuing collections which would also halt the process. Then, you can get current on your mortgage payments to attempt to keep the house. Even if you don’t plan to keep your house, bankruptcy can still protect creditors from selling your home and coming after you for the remainder of debts owed. Depending on the status of your mortgage payments and foreclosing process, you might want to consider bankruptcy.

Wages Are Being Garnished

If your wages are being garnished, it can impede your ability to financial support yourself or your family. In these cases, bankruptcy can stop the garnishments of your wages. This will give you the freedom to have money and provide the essentials to your family. In the situation where wage garnishments or collections are too burdensome, you may want to contact a bankruptcy attorney that can explain your options.

You Won’t Be Able To Survive In Retirement

As you start to look ahead into the future, retirement may not be an option with all the current debt that you owe. In fact, your current debt could stop you from having a retirement at all. In specific financial situations, it could cost less to file bankruptcy sooner rather than continuing to struggle with high amounts of debt and interest. If you are putting off dealing with debt, bankruptcy might provide an immediate option to ensure a retirement where you can still afford to eat and live a humble life.

A Fresh Start Is What You Need Most

The stress of bills and debt is oppressive. If you analyze that your current situation can’t be paid back and you need a fresh start, then bankruptcy may help. Especially if you have suffered unfortunate circumstances or other causes of bankruptcy, the process could offer a clean slate to start over. In this case, many types of debts would be relieved, giving you the second chance that you wanted. Thus, think about going through the bankruptcy process if you really do need a fresh start and believe you can use it wisely.

Every individual’s financial situation is different. There are many cases were bankruptcy is simply the best option for that person. While you would like to avoid bankruptcy if possible, these situations provided are some example of when the process should be considered. As noted, bankruptcy can help individuals who are already working to their maximum. It can assist in relieving medical bills and other types of collections. Moreover, it could save your home from foreclosure and stop garnishments. Finally, it can change your future outlook and give you the fresh start that you need. In these times, you should consider bankruptcy as one of your options.

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The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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