When your finances become tight there is certainly a point where you might be able to get out of debt without filing for bankruptcy. There are various methods, from paying down the debt with the highest interest rate first, to Dave Ramsey’s “debt snowball” method.
Yet there are some times when it becomes absolutely critical to file for bankruptcy. There are also times where individuals waste a lot of time and money attempting to shovel themselves out of debt that they will never realistically repay. How can you determine which camp you’re in?
Look at your finances.
One question you need to ask yourself if there is any reasonable way you’ll ever be able to pay off the debt under any plan. Are you healthy enough to run several side-hustles? Do you have the means and resources to try to set up passive income?
Can you extrapolate a way to get all your debts paid within a certain period of time? A 5-7 year plan may not be unreasonable under certain circumstances, but you need to be able to find a light at the end of that tunnel, and you need to have some reasonable expectation that you will have the time you need to make those payments.
It helps if you are current on all your bills right now, which means you do not have to worry about collection agencies.
Look at what your creditors are doing.
Are your collectors attempting to sue you? Garnish your wages? Levy your bank accounts? Put liens on your home? Are they trying to foreclose or repossess your secured debts? Are you in danger of having your utilities shut off, or being evicted from your apartment?
At this point, you are out of time. Your only choices are to declare bankruptcy so you can stop creditor activity in its tracks, or to allow the creditor activity to continue wrecking your life. They may even tighten their grip to the point where you can’t pay for basic needs like groceries or utilities.
Talk to a bankruptcy attorney.
Sometimes it can be very difficult to make the right decisions when you are caught inside of a situation. Speaking to an experienced bankruptcy attorney can help you make heads or tails out of your financial situation and determine the next best steps for you.
If you’re not sure what to do, reach out to Haysom Law today. Our attorneys will help you sort through next steps.
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