4 Signs It’s Time to File for Bankruptcy

Many might view the decision to file for bankruptcy as a sign of defeat, but sometimes It’s actually the best financial option on the table. Bankruptcy can help you get out from under debts and begin a new journey towards financial freedom. Here is a look at some of the signs that you might benefit from filing for bankruptcy.

When to File for Bankruptcy:

  • You’re surviving off of credit cards: It’s common for debt to get so bad that you fall into the trap of spending your entire paycheck on making payments. This is a sign you are stuck in a toxic cycle. Without any cash in the bank, this can force you pay your living expenses with your credit cards. Often, this can have the troubling effect of putting you deeper into debt each month.
  • You’re using one credit card to pay for another: Occasionally, making your credit card payment with another card to avoid higher rates isn’t such a horrible thing, but if you are regularly doing this, it’s a bad sign. Moving debt from one card to another is just a way of putting off the inevitable. If you have no clear path towards eliminating that debt it might be time to consider other options.
  • You’ve already cut expenses and taken side jobs: Everyone says the best way to get out of debt is taking on extra work and budgeting as much as possible, but if you are already putting in extra hours, working another job and budgeting as much as you can, it might be time to consider looking for another way out.
  • You’re missing payments: Occasional late payments are bad, but not catastrophic. If you are slowly watching your interest rates climb from missed deadlines, however, that’s a very bad sign. You might even find yourself in a place where you can no longer even meet your monthly minimums. This is a clear sign to think about filing.

Filing for bankruptcy can carry a certain stigma, but in reality it might be the smartest decision for you and your finances. It’s best to start while you still have some money to navigate the process, and before you dip into your retirement and incur expensive taxes. Personal bankruptcy can be a stressful journey, but it can also be the beginning of a fresh start.

Kevin D. Judd is DC bankruptcy attorney who fights to help his clients achieve financial freedom.

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