Bankruptcy can sneak up on you in surprising ways. Not everyone goes broke all at once, and that means bad financial situations often develop due to a steady drip of little things. If you're trying to figure out whether you're just in a bad financial patch or headed to bankruptcy, look at these 5 possible issues.
Ability to Pay Down Interest
Many types of debts, especially mortgages, car loans, and credit cards have accompanying interest charges. If you're at the point where you're not paying down your debts enough to reduce what you owe in interest, it's probably time to contact a bankruptcy lawyer. Otherwise, you may face the scenario where you pay more money to not get ahead. Worse, you'll probably still end up declaring bankruptcy.
Unable to Stop Repossession or Foreclosure
Once you're at risk of losing the big assets attached to loans, that's not a good sign for your financial future. However, bankruptcy can help you to stabilize the situation.
Notably, the type of bankruptcy matters a lot when it comes to the repossession of a vehicle or the foreclosure of a house. In some restructuring scenarios, you may be able to pay reduced amounts and keep the assets. The liquidation process, meaning Chapter 7, usually can't stop these sorts of things unless you're underwater on the asset's value. If you're trying to figure out what to do, contact a bankruptcy attorney and tell them what's happening.
Declining Income with Nowhere to Cut Expenses
If your income is declining due to something like a job loss or short hours at work, you may not be able to keep up with expenses. People can sometimes cut their expenses, but this solution will always hit certain limits. If you are at the point where you're not earning more and can't cut anything else, it may be time to consider bankruptcy.
Bill Collectors Constantly Harass You
Everybody deals with bill collectors at some point. However, it should never be a constant drumbeat of collection calls, text, and letters. If you can't get to the point where you have a day's peace without a collection call, bankruptcy may be an option. Notably, the bankruptcy judge will order creditors to cease harassing calls until the court can hear the case and rule.
Struggling to Make Payments
Once more, everybody will need to set up payment arrangements at some point. If you're struggling to make those payments, though, a bankruptcy attorney will tell you to explore your options.