There are those who are pushed into bankruptcy because of a medical emergency or the unexpected loss of a job. But there is also a fair share of bankruptcy cases that start with a little too much spending, a few too many maxed credit cards, and a little too little saving.
Despite all of the mistakes you might have made that led to bankruptcy, there could be one additional mistake that will actually wind up being your biggest yet.
What’s that mistake? Waiting too long to file.
Though bankruptcy is often seen as a last resort, this doesn’t mean you should wait until the absolute last minute to file. The longer you allow your debt to grow the greater the risk you face for creditors and debt collectors to take drastic action.
Filing sooner rather than later can protect important assets, including your home and your vehicle. Waiting until you’re being threatened with foreclosure, levied bank accounts, and repossession can do more harm than good.
Bankruptcy affects your credit negatively, but not nearly as much as putting off action. The longer you allow debt to be neglected the worse the impact on your credit score. Creditors will continue to file unpaid debts with the credit bureaus and every month that passes will result in more dings against your credit score.
Bankruptcy is a single drastic action that will impact your score, but once it’s finished you can begin to rebuild your score. Filing for bankruptcy also shows you took action to repair your problems instead of ignoring them.
To learn more about how it’s possible to repair your credit after filing for bankruptcy, check out this article from The Balance.
One of the primary reasons people finally commit to filing for bankruptcy is because they are facing foreclosure. Unfortunately, waiting until you’re threatened with losing your home might mean it’s too late to save it. You’re better off filing for bankruptcy when foreclosure might be on the horizon but you haven’t quite reached that point.
Waiting to file for bankruptcy can increase your risk for foreclosure.
Just as you don’t want to wait until the last minute to file if you’re facing possible foreclosure, you also don’t want to wait if repossession of your property is a risk. Filing for bankruptcy stops all debt collection efforts against you, including repossession of vehicles and other property. It might be the one action you can take that allows you to retain ownership of your car and other valuable property.
Finally, filing for bankruptcy creates an automatic stay which brings to a halt all debt collection efforts. This means creditors cannot file lawsuits against you. It also means if they’ve already filed and been granted access to your bank accounts, they’ll need to stop siphoning money out of your account.
In theory, this is of great relief. However, it should come as no surprise that once creditors and debt collectors have direct access to your money it’s tough to stop them from taking it, even with a court order. You’re better off filing for bankruptcy before you reach this point than fighting with everyone involved to stop the action one it’s started.
If you’re wondering whether bankruptcy is right for you or you have questions about how you can avoid drastic debt collection efforts, we can help. Contact the Law Office of Robert M. Geller at (813) 254-5696 to schedule a free consultation to discuss your financial situation.
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