Bankruptcy is a bit like the joker in a game of Rummy. While you could deploy it at any point, it is best to save it until you really need it.
Judging whether you should hold out a little longer or file for bankruptcy now is not simple. Once you file, you will not be able to file again for several years (although, hopefully, that won’t be a concern).
While bankruptcy is a last resort, holding out too long is unwise
Sitting and hoping that someone offers you a massive pay rise or you win the lottery is unrealistic. If you cannot meet your debts now, then something drastic will need to happen for you to do so in the future.
Some lenders encourage you to transfer your balance, take out another loan, or increase your credit limit. More often than not, this will only lead you further into debt. Here are some signs it is time to ask for help:
- Stress makes you ill: Debt worries can lead to insomnia, anxiety, depression or even manifest as physical ailments.
- You are hiding from your debts: If you throw away your mail without opening it or refuse to answer the phone for fear it is your creditor calling, then it is time to ask for help. Burying your head in the sand will only lead to your debts increasing as you accrue late payment fees and interest.
- You are about to lose your car or home: If a lender is about to repossess your vehicle or foreclose on your home, bankruptcy may be your best chance to stop them.
It is normal to avoid thinking about bankruptcy because you are afraid. Yet, once you find out more, you may wish you had acted sooner.
