Should I Wait to File Chapter 7 Bankruptcy?

bankruptcy (the dictionary project, macro shots, shallow D.O.F.)There are times when waiting to file Chapter 7 bankruptcy makes sense. However, for many people, putting off bankruptcy can actually do more harm than good.

When to File Chapter 7 Bankruptcy

Those who are struggling to both pay down debts and make ends meet often find themselves in similar situations. Listed below are examples of signs that you should seriously consider filing Chapter 7 bankruptcy, otherwise you may be hurting yourself.

  • Wage Garnishment – If a creditor is garnishing your wages, it can be very hard to make a decent life for yourself with a drastically smaller pay check. Wage garnishment is a tool used in more extreme cases by creditors, but since people who are struggling financially tend not to make a lot of money, it can cause serious stress.
  • Paying Essentials with Credit Cards – If you are in a situation where you have to pay for the water bill and groceries with a credit card, you are likely in a very dangerous debt cycle that will only increase overtime.
  • Rising Interest Rates – It’s unfortunate that once you start missing payments, creditors often increase the interest amounts, making it even harder for borrowers to make any real progress on the principle. If you find that you are only able to pay the interest on a debt, you aren’t getting anywhere.
  • Paying Credit Cards with Another – Similar to paying for essentials with a credit card, paying one credit card debt with another credit card is extremely detrimental. The cycle will continually put you into a far worse position the longer you allow it to go on.
  • Taking Money Out of Retirement Funds – If you repeatedly have to dip into your retirement fund to pay for anything, then you are only robbing yourself in the future. Also, retirement funds are generally protected in bankruptcy, meaning if you do eventually file bankruptcy, you will want to have more money in a retirement account.

All of these situations could be stopped by filing bankruptcy. Rather than doing more damage to your credit, retirement fund and mental health by putting it off, consider freeing yourself from the burden.


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