Hard times are prone to come. No matter how rich and organized you are, you can find yourself in a tight corner. If you’ve tried everything to meet financial obligations without success, consider exploring bankruptcy. Filing bankruptcy has its advantages and disadvantages. Therefore, we shouldn’t be very quick to opt in.
This piece will explore the primary scenarios in which one may consider filing for bankruptcy.
1. Your Wages Are Being Garnished
Debt collectors may pursue further action post-lawsuit to collect owed amounts. One of the things they do is garnish your wages or freeze your bank account. If approved, your employer deducts a fixed amount from your monthly wages until your debt is settled.
The automatic stay will safeguard you from wage garnishment when you declare bankruptcy. The garnishment will be halted, providing you with some financial relief. This is more important when a large percentage of your wages is being withheld. However, the stay doesn’t apply to domestic obligations like alimony and child support.
2. Your Expenses Are Higher Than Your Income
According to many financial advisors, you should be able to adhere to the 50/30/20 rule. This means you spend 80% of your income on basic needs and other wants while 20% goes to savings. If you cannot adhere to this rule and instead find yourself in debt every month, your budget is too high.
If this persists even after careful analysis and cost-cutting, bankruptcy may be an option. Debts gain interest every month. Hence, you’ll dig deeper into debt if you don’t declare yourself bankrupt.
3. You Risk Losing Your Home
Foreclosure rates have declined, yet some still face these unfortunate consequences. If your financial status reaches the point where you risk foreclosure, filing for bankruptcy will help you keep your home. This will help you keep all your assets while you create a workable plan to repay all your debts.
Your case is usually discharged after three or five years. You can prevent foreclosure if you’ve paid off the outstanding mortgage and begun monthly payments. You can eliminate this obligation if your home’s value is below the loan amount on an extra mortgage.
You and your loved ones don’t deserve to be burdened with unmanageable debts. For a fresh financial start, rely on Beckstrom & Beckstrom, LLP for expert guidance through the bankruptcy process.
