Financial difficulties can leave people feeling extremely stressed, worried and unable to think clearly about their situations. Those with significant debts who become suddenly unemployed may immediately panic and decide to file for bankruptcy without thinking. You must take the time to understand your financial situation before making a swift decision that may not be the best choice.
While bankruptcy is not always the best option for addressing financial issues, the following is an overview of some situations in which bankruptcy may be the best choice.
When you’re simply unable to pay back your debts
If you have a very low income and your debts are too overwhelming to pay back, you will likely qualify for Chapter 7 bankruptcy. This filing can help debtors because it liquidates assets to help pay back debts. In most cases, it also discharges the remaining debts, meaning that the bankruptcy filer can get a completely fresh start.
When you’re facing foreclosure
If you’re facing foreclosure due to missed mortgage repayments, filing for bankruptcy will initiate an automatic stay, meaning that for a certain amount of time, creditors will not be able to move forward with the foreclosure.
When you need more time to repay your debts
If you have a steady income but a high amount of debts to pay, you may want to consider filing for Chapter 13 bankruptcy. This will allow you to restructure your debts so that you can afford to pay them back over time.
Filing for bankruptcy could give you peace of mind and allow you to get a financial fresh start. That’s why you should be proactive in investigating whether it’s right for you.