Bankruptcy is designed to offer a fresh start. In some situations, the process is the best path to future financial security. Not sure if the process is right for you? Ask yourself the following:
- Am I getting frustrated by calls from creditors? Creditors may call or otherwise contact you in attempts to encourage payment. Although the motivation for these repeated attempts may be understandable, they can be frustrating. An approved bankruptcy petition results in an automatic stay. This court order requires that all attempts by creditors to reach you stop immediately. A failure to do so can result in legal ramifications against the creditor.
- Am I considering dipping into retirement savings to pay off debt? First off, in most situations the answer to this question is a big no. Retirement savings accumulate over time. Removing assets from these accounts has a huge impact in future financial security. Depleting retirement funds can make current financial struggles potentially insurmountable in the future. Not only will it take much longer to rebuild those savings, but the amount removed is generally penalized. This means that after fees and penalties are paid you wouldn't even get the full amount that you put into the account.
- Are my wages being garnished? Wage garnishment is a process that allows creditors to take money from your paycheck before you are even paid. This can make getting back on your feet even more difficult. In most cases, the automatic stay mentioned above stops this process as well.
If you answered yes to any of these questions, bankruptcy may be the right option for your future financial stability.
A point of additional consideration
It is important to note that these are just a few instances when bankruptcy is the best option. Those who find themselves struggling with debt are wise to seek the counsel of an experienced bankruptcy law attorney. This legal professional can review your situation and discuss the pros and cons of the process, ultimately helping determine the best option for your situation.