Managing your finances can be one of the most challenging parts of being an adult. From the lack of financial education in schools to the rapidly rising living costs, staying on top of your financial obligations can be difficult. Due to these struggles, you and many others may find yourselves in significant amounts of debt that are no longer manageable.
Depending on the severity and nature of your financial situation, this may mean it is time to consider filing for bankruptcy. To further understand your options, you need to know about the signs that indicate it may be time to consider bankruptcy.
What Does it Mean to Declare Bankruptcy?
Before we jump into the signs that show you may want to consider bankruptcy, it’s best to understand what it means to declare bankruptcy.
Declaring bankruptcy is a legal process in place to help individuals repay or liquidate some or all their debts under the protection of the federal bankruptcy court. There are several types of bankruptcy for both businesses and individuals. Chapter 7 and Chapter 13 are the two types of bankruptcy filing options for individuals.
Chapter 7 Bankruptcy: Referred to as “liquidation bankruptcy.” Under Chapter 7, an appointed trustee gathers and sells the debtor’s non-exempt assets. With the proceeds from the sale of these assets, creditors are then paid. Common unsecured debts, including credit card balances and medical bills, can be discharged, effectively giving the debtor a fresh start. However, certain debts like student loans and recent tax debts are generally not dischargeable.
Chapter 13 Bankruptcy: Commonly known as the “wage earner’s plan,” allows individuals with regular income to develop a repayment plan to pay back all or part of their debts. The repayment plan typically takes three to five years to complete. This type of bankruptcy helps debtors keep their property and provides a manageable way to catch up on overdue mortgage or car loan payments.
Declaring bankruptcy can provide relief from debt collectors, halt some wage garnishments, and stop foreclosure or repossession proceedings.
Filing for bankruptcy is a decision that requires careful consideration of all available options. Consulting with a qualified bankruptcy lawyer can help you find the best course of action based on your specific financial situation.
Draining Retirement and Savings Accounts
Securing a safe and funded retirement is no simple task. It can be difficult to save for so far into the future when you are struggling with finances now. However, its importance must not be understated.
If you find yourself draining or dipping into retirement accounts or savings accounts to stay afloat, it may be time to consider filing for bankruptcy. Filing for bankruptcy can provide a more sustainable solution to your financial troubles and help set you back on track to a well-funded retirement account.
Facing Foreclosure or Repossession
Facing foreclosure on your home or vehicle repossession is an anxiety-inducing nightmare for many in our world. It can feel like impossible to manage these circumstances. But at the core of this nightmare is the truth that must be acknowledged: your finances are struggling.
Filing for bankruptcy has the potential to help alleviate some of the financial stressors that may be causing the situation you are in. Bankruptcy is a way to set you onto a new financial path of peace.
Borrowing to Pay Debts
We have all heard of the saying “robbing Peter to pay Paul”. When you find yourself having to take on more debt to pay your current debts – it is a huge sign that you have a problem. Loans are a short-term solution with devastating consequences when you use them to pay off other debts.
Bankruptcy provides a sustainable solution to those who are struggling to manage surmounting debts.
Experiencing a Major Financial Setback
Life is unpredictable, and major financial setbacks can strike at any time. Whether it’s a job loss, medical emergency, or divorce, these events can lead to financial instability. If you are unable to recover from such a setback and find yourself drowning in debt, bankruptcy might be a necessary option to consider.
If unexpected events have led to major financial difficulties, seeking advice from a bankruptcy lawyer can provide clarity on your legal choices and help you chart the most suitable course of action. Taking the initiative to manage your financial situation can result in a more steady and secure future.
Finding the Right Bankruptcy Lawyer for You
If you are considering filing for bankruptcy, you need a bankruptcy lawyer who can help you navigate the process seamlessly. That is where Adam M. Freiman can assist you.
Adam M. Freiman has been practicing law for over 25 years and is the founder of one of Baltimore’s most prestigious law firms. He realized that bigger doesn’t mean better, which is why he now runs his own firm, where he represents all his clients personally. When you choose to work with Adam Freiman, P.C., you are hiring Adam himself.
