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How do you know it’s time to file for bankruptcy?

Bankruptcy is a big step — and not one that anyone should take without careful consideration. So when should you begin considering it?

If you are having difficulty making the required payments on your loans, credit cards and other debts while still being able to manage your living expenses, it’s worth exploring the advantages that bankruptcy could provide. Here are some other signs that bankruptcy may be the best solution:

  • You’re taking out loans (such as payday loans) to pay your everyday expenses and monthly bills.
  • You’re so behind on your mortgage payments that your home is in danger of foreclosure
  • You’re using your retirement accounts to pay your debts and/or expenses
  • Debt collectors are contacting you or perhaps have even filed suit against you

One bankruptcy attorney notes that for bankruptcy to be “worth your while,” it should provide enough debt relief that you won’t end up back in your current predicament. For example, if you still have some major expenses, such as a medical procedure, ahead of you, it’s best to wait until you’ve been hit with those bills if you’re considering Chapter 7. That way, you can work to include them in your bankruptcy. In a Chapter 13 bankruptcy, however, you can ask the court to allow new debt to be included after your filing.

There are many differences between Chapter 7 and Chapter 13. That’s why it’s essential to understand both of them, know which one(s) you qualify for and determine which is best for your situation. An experienced attorney can give you more information about the pros and cons of filing for bankruptcy and provide guidance as you determine whether bankruptcy is your best option for dealing with your debt.

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