How Do I Know When I Need to File for Bankruptcy Relief?

Do you know the warning signs of financial trouble? If you were experiencing any signs that can indicate you may need the debt relief offered through a bankruptcy filing, would you know it? Our Prescott bankruptcy lawyers understand that filing a personal bankruptcy under Chapter 7 or Chapter 13 of the Bankruptcy Code can be a terrifying prospect. However, filing for bankruptcy relief can give you the fresh start you need to recover from a financial crisis.

Below are several warning signs that might indicate you need our assistance in filing a bankruptcy petition.

• Warning Number 1: You are using credit cards to pay bills.

If you are using your credit cards to pay living expenses, such as utilities, rent, food, or gas, this could be an indication you are headed toward a bankruptcy filing. When you begin using your credit cards to pay other bills, such as car payments, mortgage payments, and other credit card bills, you need to consult with our Prescott bankruptcy lawyer as soon as possible.

• Warning Number 2: You owe more than you earn.

If you are paying out more each month in bills and living expenses than you earn, a Chapter 7 bankruptcy case might be the best option for getting back on your feet financially. It is virtually impossible to get out of debt when you are making less than the total of your monthly bills and expenses. Without bankruptcy assistance, you will continue to incur debt until your creditors freeze accounts, and you can no longer obtain credit.

• Warning Number 3: You are served with foreclosure papers or your vehicle is repossessed.

Do not delay in contacting our Prescott bankruptcy law firm to discuss options to stop foreclosure and stop repossession. Filing a bankruptcy petition stops these actions to give you the opportunity to propose a plan to keep your car and your home. A Chapter 13 plan allows you to catch up your past due mortgage payments over three to five years. In some cases, you might be able to reduce the amount owed for the lien on your vehicle in addition to reducing the interest rate on the loan.

• Warning Number 4: You are served with a collection lawsuit.

A creditor might proceed with a lawsuit to collect an unpaid debt. If you do not respond to the lawsuit or you do not have a valid defense, the court might grant the creditor a default judgment. Once the creditor obtains a judgment, the creditor can take further action to enforce or collect the judgment. A bankruptcy filing stops the collection efforts. In most cases, a bankruptcy filing discharges the debt.

• Warning Number 5: You expect your loss of income to last for a substantial period or become permanent.

In some cases, you might be able to survive a temporary loss of income or decrease in income by using money from savings or credit cards. However, if the loss becomes permanent or continues for an extended period, you might need to consider filing for bankruptcy relief. Filing a bankruptcy case can get rid of the debt you have so that you can recover from a financial crisis and get back on your feet.

• Warning Number 6: You have borrowed from or you are considering withdrawing retirement funds to pay bills.

You need your retirement funds to be secure for your future. In a Chapter 7 or Chapter 13 cases, your retirement funds are protected by bankruptcy exemptions. Once you withdraw funds from your retirement accounts, the funds cannot be protected by the bankruptcy exemptions for retirement accounts. Furthermore, using retirement funds to pay debts may not resolve the underlying issues that are causing your financial problems. Instead of jeopardizing your future unnecessarily, contact our Prescott bankruptcy lawyer to discuss how filing a Chapter 7 or Chapter 13 bankruptcy petition can eliminate your debt while protecting your retirement funds.

• Warning Number 7: You are considering an equity line or second mortgage to consolidate debts.

When you withdraw equity from your home to consolidate unsecured debts, you are risking your home by converting unsecured creditors who could not take your home into a secured creditor who can foreclose if you do not pay the debt. Bankruptcy exemptions usually protect the equity in your home.  Therefore, you could file Chapter 7 to get rid of unsecured debt while retaining the equity in your home. Before you apply for a consolidation loan or an equity line, call our Prescott bankruptcy lawyer for a free consultation to discuss all options for eliminating debt.

Do Any of These Warning Signs Apply to You Right Now?

If you are experiencing one or more of the above warning signs, you need to act now to protect your property and income. It does not cost you anything to meet with our Arizona bankruptcy lawyer to discuss your situation and get advice about how you can get out of debt.

Contact our law firm by calling 520-500-1652 to request your free appointment with a Tucson bankruptcy attorney. You may also contact our office by using the contact form.