At McElroy & Associates, We Understand That Bad Things Can Happen To Good People

Get A Fresh Start Through Bankruptcy

  1. Home
  2.  » 
  3. Consumer bankruptcy
  4.  » When should I file bankruptcy?

When should I file bankruptcy?

On Behalf of | Oct 16, 2021 | Consumer bankruptcy |

Bankruptcy can be a helpful financial tool for many situations, but it is not always the answer. You should make sure that you do not file without considering your finances.

Keep in mind that there are limitations on how often your can file, so you want to be sure that if do, it is absolutely necessary. In addition, bankruptcy takes a toll on your finances and credit, so you do not want to do it needlessly. According to NerdWallet, there are some signs for which you can watch to help you know when the right time is to file bankruptcy.

The dischargeable debt limit is high

You cannot discharge some types of debt through bankruptcy. It is essential to be sure that the debt causing you issues is that which the court will discharge. This includes utility bills, rent, credit cards, medical bills and most loans. If your debt is mainly the type that is not dischargeable, such as student loans, tax bills or child support, then it would not make sense to file.

Credit score has taken a dive

While filing bankruptcy will have a negative effect on your credit, it is much easier to rebound from than having a lot of negative reports on your credit. If you are at a place where your credit has hit rock bottom, bankruptcy can be like a reset.

Collection issues are immense

If you have a lot of debts in collections and have creditors constantly contacting you or any court cases filed against you, then bankruptcy can bring relief. If you file bankruptcy, it stops all collection activity, so you can avoid a judgment from the court against you or other actions. It can also help to end garnishments for dischargeable debts.

Bankruptcy can be a good choice in various situations, but you should always do an assessment before taking this step.