Thousands of Florida residents are still facing hard economic times. For many of them, bankruptcy offers a legitimate, effective way to eliminate debt and get a fresh start. In 2010 alone, 110,304 Floridians sought protection in bankruptcy court, making Florida 13 th in the nation for per capita bankruptcy filings.
Bankruptcy is not for everyone, however. Although it is the best course of action for many individuals overwhelmed by debt, filing for bankruptcy can have long-term consequences; it should not be taken lightly. Even so, it can also be incredibly detrimental to wait too long to file for bankruptcy. For anyone worried about debt, it is important to become familiar with a few common warning signs that indicate it may be time to contact a Tampa Bay bankruptcy lawyer to explore your options.
Know the Warning Signs
The most important, and perhaps most obvious, indicator that it may be time to start considering bankruptcy is insolvency. Do you owe more than you own? As your debt load sinks deeper into the red, bankruptcy almost always becomes a more attractive option.
A high debt burden alone, however, may not be enough to necessitate bankruptcy. Look at what types of debt you have. Certain obligations, such as student loans, are not discharged in bankruptcy; thus, a heavy student loan burden may not be a good reason to pursue bankruptcy. On the other hand, some types of debt are nearly impossible to catch up on without filing for bankruptcy. For example, because of particularly high interest rates, large credit card debts are difficult to confront without the help of a bankruptcy court.
If you have tried to reduce your debt through legitimate alternative debt management strategies with minimal success, it may also be a sign bankruptcy is right for you. So-called “debt settlement” and “foreclosure rescue” scams have proliferated in the wake of the Great Recession, so you should exercise caution in pursuing any alternative debt relief options. Steer clear of anyone who charges an upfront fee and only deal with an established credit counseling organization. If credit counseling has been failed and efforts to negotiate directly with creditors have also been unproductive, bankruptcy may be the next logical step.
Sometimes, the actions of your creditors may alert you to the desirability of bankruptcy. Creditors are well-versed in debt and may step up collection efforts if it looks like you are headed towards bankruptcy. Perhaps you have credit cards going to judgment, maybe there is a risk of your wages being garnished or your home could even be threatened with foreclosure. You may be repeatedly hounded by phone calls and letters from bill collectors. In extreme cases, you might even be facing a lawsuit. When your creditors start engaging in one or more of these tactics, it is likely time to seek the advice of a bankruptcy attorney.
Finally, you should pay attention to your personal stress level. Are you constantly worrying about how you can dig your way out of debt? Is financial stress negatively impacting your health? Introspection can be a valuable tool in making a bankruptcy determination. Although it is impossible to quantify monetarily, relief of mental anguish is arguably one of the most important benefits bankruptcy can provide.
Seek Help Early
One critical mistake made by many consumers facing oppressive debt is trying to “hang on” as long as possible before filing for bankruptcy or even speaking to an attorney. This is almost never a good idea. Some forms of bankruptcy (like Chapter 13 bankruptcy) involve debt consolidation and partial repayment as well as discharge of certain obligations, so digging yourself deeper into a hole could negatively impact the terms of your eventual bankruptcy plan. Furthermore, retirement savings are usually completely protected in bankruptcy; borrowing against these funds or withdrawing them early to pay off debts that could be handled in bankruptcy unnecessarily puts your future at risk. In addition, borrowing money to pay off other loans can damage your relationship with a wider network of credit providers, potentially impacting your future ability to secure credit.
If you are concerned about your financial well-being, do not repeat the mistakes made by many in a similar situation: take notice of the common signs that bankruptcy could be right for you. Then, call a Florida bankruptcy attorney as soon as possible to get the most out of your bankruptcy.