What Financial Situation Constitutes a Bankruptcy Filing?

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You should not consider filing for bankruptcy unless you are in a serious financial emergency. However, an “emergency” can mean a different thing for each person. Read on to discover what financial situation constitutes a bankruptcy filing and how a seasoned Rockland County bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq., can guide you toward making the best decision.

What are some misconceptions about filing for bankruptcy?

Understandably, many people are intimidated by the idea of having to file for bankruptcy. But they may be intimidated for the wrong reasons. That is, below are some common misconceptions about filing for bankruptcy:

  • “You will go to jail if you declare bankruptcy”: no, you will not incriminate yourself by admitting that you are struggling with your financial situation. Declaring bankruptcy is completely legal by federal and state law and may just be the best way to get you out of this struggle.
  • “You will lose your home if you declare bankruptcy”: no, you will not be punished for asking for some financial assistance. Instead, an Automatic Stay will be established so that your mortgage lender cannot take it from you or foreclose it.
  • “You will hurt your credit score if you declare bankruptcy”: while your credit may hurt for a period of time, you will be able to rebuild it in the future. Plus, this experience may give you valuable lessons and tools so that you never encounter this financial situation again.

What are common financial situations that constitute a bankruptcy filing?

Filing for bankruptcy can be of benefit to you. But again, it will only be beneficial if your financial situation calls for a bankruptcy declaration. A common financial situation that has led people toward bankruptcy filing is when they are unable to keep up with their bills. With this, they find themselves taking desperate actions, such as the following:

  • They start to use their savings, retirement, or emergency funds to pay for their monthly expenses.
  • They start to pawn their valuable possessions so that they can pay for their monthly expenses.
  • They start to ask loved ones to be co-signers of loans to pay for their monthly expenses.
  • They start to become financially dependent on their loved ones.
  • They start to hide their purchases from their loved ones.

So, if you find yourself falling into any of the above habits, then it may be in your best interest to declare bankruptcy. Below are additional signs that you should do so:

  • Your credit card is being declined, your checks are being bounced, and your requests for additional credit and being denied.
  • You spend more than 20 percent of your net income on your credit card bills.
  • You find the need to use your credit card to pay for your everyday expenses.
  • You start to get charged high interest rates when you apply for loans.
  • You start to receive calls from lenders and debt collectors.

If you still need assistance with understanding your financial situation, reach out to a competent Rockland County bankruptcy attorney today.