For most people, bankruptcy is a vague term related to many negative opinions. However, in some situations, it is the best way to eliminate debt and move forward with your life. It is important to exhaust all of your options. If you are in one of these difficult situations, bankruptcy may be the answer.
Crushing Medical Debt
An unexpected medical event can ruin the finances of the most careful spender. Many insurance policies come with hefty deductibles and plan limitations. A cancer diagnosis, stroke, or heart attack can bring an avalanche of medical bills. Combine those with months of missed work, and you are suddenly very deep in debt.
It is likely that medical debt from a major illness will follow you for years. If you were a careful spender before the event, bankruptcy can help you get your life back on track. If the stress from collection attempts are affecting your daily life, it is time to learn about bankruptcy.
If you lost your job unexpectedly while you are paying off considerable debt, you could be facing financial disaster. Finding a new job could mean additional education, travel expenses, and a period of unemployment. Keeping your regular payments during this time is likely to be impossible.
When you know you don't have the income to continue meeting your basic needs, it is time to find another solution. Bankruptcy can help you manage your finances instead of watching the situation get worse.
Gaining Debt to Pay Bills
Credit cards can be handy for emergencies. However, if your monthly bills have become emergencies, you are beginning a downward spiral. It is always responsible to pay bills on time if you can, but using credit to pay them will eventually undermine your efforts.
Occasionally using your card to make a payment when payday is just around the corner is a reasonable choice. If your bills regularly put you deeper in debt, you are in trouble. Payments and interest rates will build up and drown you in debt.
If you are in danger of losing your home, bankruptcy can keep the roof over your head. As soon as you file for bankruptcy, creditors must stop collection efforts. Depending on the type of foreclosure you choose, you will at least have a few months to get things taken care of. There is even a chance you can work out a payment plan to allow you to keep the home. You will have the opportunity to get your finances in check and catch up on your payments.
Creditors have the power to take a portion of your paycheck or even put a lien on your property. While you might have agreed to this in a court settlement in an attempt to get caught up, it does not always work. Without enough income to make ends meet, you could end up deeper in debt. Bankruptcy can block the creditors' actions and give you time to get your finances back on track.
Bankruptcy is not always the answer to any situation. However, it shouldn't be passed over without consideration. It is important to consider all of your options and speak with a financial professional before taking legal action. Bankruptcy is a big decision, but it can help you get your finances back on track and move forward with your life.