While bankruptcy has helped millions of Americans get a fresh start, it’s not the answer for everyone. Whether you could benefit from filing depends on a variety of factors, including the kinds of debt you owe and the various assets you have acquired. It’s wise to consult with a seasoned bankruptcy lawyer to discuss your specific financial situation. If any of the following applies to you, there’s a good chance filing for bankruptcy will provide the fresh start you need. 

3 Signs You Should Consider Filing for Bankruptcy 

1. Facing Foreclosure

If you’re at risk of losing your home, chapter 13 bankruptcy can provide the opportunity to catch up on back mortgage payments. This approach is for debtors who have regular income but are struggling to meet all their financial obligations. Chapter 13 debtors propose a three- to five-year repayment plan that is more manageable given their income. Unsecured creditors receive less than secured creditors, and back mortgage payments and taxes are repaid in full. After the plan has ended, any remaining unsecured debt is discharged. This can be up to 80% of unsecured credit card debt.

2. Withdrawing Retirement Funds Prematurely 

If you are liquidating retirement accounts to pay creditors, filing for bankruptcy may be the most strategic way to proceed. Typically, retirement assets are exempt during bankruptcy proceedings. In other words, using such funds to repay dischargeable debts threatens your future financial security, and is using money that is otherwise protected to pay debts that can be discharged. It is throwing good money after bad.

3. Barely Making a Dent in Your Debt

If you are barely making minimum payments due, you are not financially sound, irrespective of your credit score or rating. You are not reducing your principal balance. This means it will never actually be paid off unless you receive a major windfall, like winning the lottery or getting an inheritance. It’s wise to consider bankruptcy if you cannot pay back what you owe within 36 months, and not use retirement money. Another rule of thumb is if total credit card debt is at least half of your annual income, bankruptcy should probably be considered. 

To discuss your financial situation with a knowledgeable bankruptcy attorney, get in touch with Thomas A. Corletta, Attorney at Law. Practicing out of Rochester, NY, Thomas Corletta has nearly 40 years experience. When you turn to this tireless lawyer for guidance, you can count on receiving directly applicable legal advice. A solo practitioner,  Thomas Corletta personally handles each and every case and is directly accountable to his clients. In addition to bankruptcy filings, he assists clients with family law disputes, criminal charges, DWI and traffic violations in his multi-faceted practice. To request an initial consultation, call (585) 546-5072 or reach out on his website.