How to Tell if Bankruptcy is Right for You

 Posted on May 08, 2024 in Bankruptcy

Financial troubles can be incredibly stressful for anyone. If you are struggling with debt, you may be wondering if bankruptcy is the solution. Bankruptcy is a legal process that can help eliminate or reorganize your debts, but it is not right for everyone. A Texas lawyer can help with some factors to consider when determining if bankruptcy might be the best path forward.

Severity of Debt Burden

One of the primary indicators that bankruptcy could be appropriate is if your debt load has become unmanageable. Ask yourself if you are consistently behind on minimum payments, being charged late fees, or receiving collection calls. If debt payments are consuming a significant portion of your income each month, making it difficult to afford other necessities, bankruptcy may provide relief.

No Feasible Debt Repayment Plan

Before filing for bankruptcy, you should attempt to negotiate with creditors and create a structured repayment plan. However, if your financial situation makes repaying the full amounts owed unrealistic, even with debt consolidation or settlement, bankruptcy allows a fresh start.

Asset Protection

Bankruptcy can help protect certain assets that are exempt from liquidation, such as your home, vehicle, retirement accounts, and personal belongings (up to certain value limits). If you are worried about losing essential assets to repay creditors, filing for bankruptcy may be advisable.

Wage Garnishment Threats

If creditors have obtained judgments against you and are threatening wage garnishment, filing for bankruptcy can immediately stop this process through an automatic stay. This protects your income while giving you time to address the debt strategically. You should never have to worry that you are working just for your pay to be taken right away because of debt.

Overwhelming Medical Debt

Medical bills are one of the leading causes of bankruptcy filings. It is not uncommon for people to have several thousands of dollars in debt from medical bills. If you have accumulated substantial medical debt due to an injury, illness, or other healthcare costs not fully covered by insurance, bankruptcy could discharge or reorganize this overwhelming burden.

Type of Debt Matters and Situational Changes Should be Factors

It is important to understand that certain debts, like student loans, alimony, child support, and most tax obligations, generally cannot be eliminated through bankruptcy. If these non-dischargeable debts comprise the bulk of what you owe, bankruptcy may provide limited relief.

Sudden negative life events like job loss, divorce, or the death of a spouse can abruptly impact finances. If such a change has derailed your ability to keep up with debts, bankruptcy could help you regain stability during a transition period.

Contact a San Antonio, TX Bankruptcy Lawyer

Although bankruptcy is not ideal, it can sometimes be the most practical option for restoring a more stable financial position. If several of the above factors resonate with your current struggles, bankruptcy may be right for you. A Schertz, TX bankruptcy attorney will help you thoroughly understand your options. Call Law Offices of Chance M. McGhee at 210-342-3400 to start with a free consultation.