An unexpected event in your life can destroy you financially. The loss of a job, a serious injury or illness or a breakup can leave you unable to pay your bills.
You may start to rely on credit cards, and suddenly find yourself overwhelmed by debt you know you will never be able to pay back. As you spiral deeper into debt, you might start to wonder if a Chapter 7 bankruptcy is the right option.
Signs it is time to file
But how do you know if it’s the right choice? These are some signs that it is probably time to file for a Chapter 7 bankruptcy:
- Paying off your debt will take 5 years or more
- Your monthly income is below your state’s median income level
- Your unsecured debs are more than half your yearly income
Unsecured debts are debts that do not have any collateral attached to them. Credit card debts are unsecured debts. Things like a mortgage or car loan are secured debts, because if you do not make payments, the bank can take the house or car.
Examine your stress level
Another major sign it is time to file for a Chapter 7 bankruptcy is if the stress over your debt affects your daily life. Losing sleep or inability to focus on your job or your relationships because you are worried about your debt is a sign that something needs to change.
If you have fallen behind on your payments, creditors may already be calling or harassing you. This is another sign it is time to file.
How a Chapter 7 bankruptcy works
A Chapter 7 bankruptcy discharges all your eligible debts. When your bankruptcy is complete, you can start over with little to no debt and begin anew.
Bankruptcy no longer has the stigma it once did. Today, bankruptcy is becoming widely recognized as a smart financial choice for people who have had a string of bad luck and want to start over financially.
Filing for Chapter 7 bankruptcy has various requirements and steps. Once you make your decision to file, a bankruptcy attorney can help you through each step of the process.
