Bankruptcy might not seem like an appealing choice, and in many cases it is not, but it can sometimes be the best choice. Bankruptcy may be the only way to rebuild your financial life. Look for the signs below to let you know it’s time to file.
When Should You File for Bankruptcy?
1. Your Bills are Late Every Month
You might think that you’ll catch up with your bills next month. However, if you feel like your bills are constantly late, it might be time to reevaluate your finances. Every late bill, whether it’s a credit card payment or a medical bill, results in fees that add to the total. Each late payment will also cause your credit score to lower, making it more difficult to improve your credit rating.
2. You Owe More Than You Earn
Lenders use a formula called the income versus debt ratio to determine someone’s creditworthiness. This formula can be used to assess your financial situation. Add the total amount of money you owe and your total income in a year. If your debt is more than half of your annual income, this is a good indication that your financial situation is out of control and it may be time to file for bankruptcy.
3. You Have More Than 1 Type of Debt
If you owe money on credit cards, personal loans, medical bills, and other creditors, this is a sign that you have been financially struggling for a while and probably can’t borrow from any more loans or obtain more cards. Your best option is to consult a bankruptcy attorney and find out what debt relief services are available to you.
4. Your Level of Income Won’t Improve
Is it likely that your annual income will increase in the near future? If the answer is no, it will be difficult to pull yourself out of debt without help. It may be better to consult an attorney about your debt relief options.
The Law Offices of Frank E Turney are experienced in helping people file for bankruptcy in Catonsville, MD. They can discuss your financial situation and help explore the best debt relief options for your situation. You can learn about their legal team by visiting their website. If you’re ready to learn more about debt relief and bankruptcy, call (410) 788-8830 to schedule an initial consultation.