Dealing with the burden of debt is overwhelming, and you may not know what to do to get out. Many options are available to you, each with its pros and cons. Which solution is right for you depends on your circumstances.
A common choice is bankruptcy, but despite its numerous benefits, it is not always the best answer in every situation. How can you tell that filing for bankruptcy is the right thing to do?
1. Everyday expenses become unaffordable
It is normal to have some debt, especially if you have a house and/or car. You know the debt has become too much when it prevents you from being able to pay for daily costs such as food and gas. If following a budget is ineffective in making your money last through the month, you are probably in over your head.
2. Taking on more work does not help
Working two jobs is common for many people in a variety of socioeconomic levels, but being in this position should help you stay on top of bills or save up money for big expenses. If multiple jobs are barely keeping you afloat and not reducing the mountain of debt, it has gotten too big.
3. Your credit cards are a mess
Do you find yourself transferring balances from one card to the next? Have you consistently missed payments and thus incurred late fees? Is interest racking up on your monthly statements? Has your credit score dipped significantly due to these issues? Even if credit card use is not the main reason for your financial situation, it may be contributing to the problem.
4. Your assets are in jeopardy
Perhaps the scariest part of being in debt is the fear of losing your belongings. You could face vehicle repossession, home foreclosure and wage garnishment. Bankruptcy puts an automatic stay on these actions so you have the opportunity to secure your assets if possible.