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Due to precautions related to COVID-19, we have expanded our options for remote consultations. Please contact our office to discuss whether a full phone consultation or video conference is appropriate for your situation.

Top 7 Warning Signs You Need to Consider For Filing Bankruptcy

Filing for bankruptcy is usually one of the last things people do when they want to get rid of financial troubles. But bankruptcy is a complex legal process to deal with for general people. What criteria determine whether or not you should file for bankruptcy? There are some warning signs that it may be time to consider filing for bankruptcy. Let’s have a look at those signs!

When to Consider Filing for Bankruptcy?

Knowing when to consider bankruptcy filing can make a big difference. Some factors might be pointing you toward it, and you have to look a bit deeper to decide whether bankruptcy chapter 7 or bankruptcy chapter 13 is right for you.

1. You are Facing Foreclosure

Foreclosure

If you are dealing with foreclosure, this is the first sign that you may need to file bankruptcy. Foreclosure means you’ve fallen behind on your mortgage payments and are unlikely to be able to catch up. A foreclosure attorney is the person to help you with it. He’ll examine your situation and advise you on the best course of action. Filing Chapter 13 bankruptcy is also helpful in reaffirming your debt and forming a new repayment plan if you are facing foreclosure.

2. You are Using Credit Cards for Basic Necessities

Another sign you may need to file for bankruptcy is when you are using credit cards to pay for all your necessities. You are using credit cards to pay for groceries, gas, and just the things you need every day because you do not have enough cash or money in your account to pay for them otherwise.

3. Wage Garnishment

Wage Garnishment

You’re dealing with a wage garnishment, then filing for bankruptcy might be a good decision. Wage garnishment is when a creditor has a ruling against you, and they take a portion of your paycheck each week or month to pay back the loan. It can be destructive to your livelihood and make it hard to keep up with your daily buys.

4. If you Are Considering Using Retirement Funds to Pay Debt

If you’re using your retirement money to pay off debts, it could be better to declare bankruptcy. If you use those funds to pay down debt, you will not have that money to sustain when you retire, and you may be liable to a tax penalty on the money you took out.

5. Harassment From Creditors

Filing for bankruptcy can benefit you if you’re being harassed by creditors. You can get creditors off your back and have your debt cancelled with the help of an experienced bankruptcy attorney. Creditors will focus on you and attempt to extract as much money from you as possible. If you find yourself avoiding creditor calls, you may consider filing for bankruptcy.

6. Creditors are seeking to Sue

Another issue that may prompt you to file for bankruptcy is if your creditors have threatened you with legal action. If you have received sue notification from your creditors, you should consider filing for bankruptcy since it will help you get rid of those creditors.

7. You Spend More Money than You Earn

Bankruptcy may be a viable choice if you frequently spend more money than you make. Ideally, one should spend around the same amount they make and save some money each month, but life is very unexpected, and you may face situations where you require to spend higher over the period. If you are not able to control such expenses, you may want to consider bankruptcy so that you can change your debt-to-income ratio.

If you are dealing with one or more of these factors, it could be a good idea to start thinking about bankruptcy and planning your next actions.

Bankruptcy FAQs

1. Things to Consider Before Filing Bankruptcy?

  • Are there any assets that I can sell to pay off my debt?
  • How high are your debts?
  • How much money do you make each month?
  • Do you need the help of an attorney?
  • Be completely truthful about your earnings, assets, and liabilities.
  • Your financial situation will be known to the whole public

2. What happens if you are filing bankruptcy?

The petitioning of the court is the first step. If you are accepted, you must list all of your creditors and obligations, as well as your assets, income, and complete online financial counselling. After that, you’ll have to appear in court to file bankruptcy, or you can hire an attorney to do it.

3. How often can you file for bankruptcy?

You can file every seven years for most types of bankruptcy. You can file more frequently for some forms. Your bankruptcy attorney can help you determine what is going to work best for you.

4. Benefits of filing bankruptcy?

  • The most significant advantage is that you will be able to pay off those debts that are holding you back and stopping you from succeeding.
  • You may begin to rebuild your credit, save money, and change the way you manage money in the future.
  • Creditors’ harassing phone calls, repossessions, credit card rejections, and lawsuits will all be stopped.
  • Bankruptcy gives you a fresh start.
  • The bankruptcy exemptions law may allow you to keep your property after filing for bankruptcy.
  • Bankruptcy can stop foreclosure

5. What do you need to do filing for bankruptcy?

The first step is to speak with a bankruptcy lawyer. They will be able to guide you through each step and ensure that you have everything you need for a successful bankruptcy.

It’s always a good idea to speak with an attorney before filing for chapter 7 bankruptcy, chapter 13 bankruptcy, or any other type of bankruptcy. They can assist you in determining your alternatives. Your attorney is going to be with you through every step of the process and will be able to help you file, work on your financial counselling and help you take the next steps after your bankruptcy is complete.

If you are looking for a free consultation regarding filing for bankruptcy in California, you can contact us. With 20+ years of experience, Nathan A. Berneman, APC in Los Angeles, CA, can help you take control of your financial situation and provide you with a solution to your money troubles.

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