When Is The Right Time To File Bankruptcy

We are asked this question frequently and the response we usually provide our clients is as follows:

You should consider filing for bankruptcy if:

1. You are borrowing from Peter to pay Paul. If you’ve been playing musical chairs with your credit cards, borrowing from Chase to pay Discover, it’s definitely time to speak with a professional about your finances.

2. Paying the monthly minimum on your credit card. This may be one of the worst mistakes clients make. By making the minimum payment, you are basically repaying interest only. The average credit card loan will take 33 years to repay if you pay the minimum amount. That’s a really long time!

3. Insufficient disposable income. Disposable income is the money you have left over at the end of the month after paying all of your bills. If you are in the red every month because you have too much debt, it’s time to get help. Another good indicator is if you’re charging groceries because you don’t have enough money to buy milk.

4. Your wages are being garnished or you have pending lawsuits. This should be fairly obvious. If you have creditors knocking on your door – time to get help.

5. You can’t sleep or you are worried about debt. Frequently, I’ll meet with clients that have not slept for months, have been fighting with their spouse or just plain “stressed out” because of debt. Don’t make the mistake we see most often – waiting too long.