If you are constantly dealing with debt collectors calling you at home or work, it may be a good idea to consider getting bankruptcy protection. However, there are other less obvious signs that bankruptcy may be best for you. Let’s take a look at these signs and why they indicate the need to seek protection from creditors.
You’re Thinking About Liquidating Retirement Assets
It may be tempting to liquidate retirement assets inside of an IRA or 401(k) to pay off your debts. However, those assets are protected in a bankruptcy filing regardless of who your creditors are. If you owe a tax debt, the IRS typically won’t be able to garnish or otherwise seize retirement funds until you have access to them yourself. Therefore, it may be best to let your retirement accounts grow unimpeded while you figure out how to pay your debts another way such as filing for bankruptcy.
Your Minimum Debt Payments Only Cover Late Fees
When you make a credit card or other debt payment after the due date, your lender may impose a fee or other type of penalty. In most cases, your next payment will be applied to the penalty and then any interest that has accrued on your balance. Therefore, it is possible that your payments don’t go toward the principal balance at all. If you notice that your balance is staying the same or increasing despite making the minimum payment each month, it may be time to have it discharged.
You Are Afraid to Answer the Phone or Check the Mail
While you may understand that you can only do so much to get a handle on your debt, it doesn’t make talking to debt collectors any easier. It also doesn’t make it any easier to get collection letters or other letters threatening possible legal action. If you have started to screen your calls or stopped checking the mail, it could be a good idea to look into bankruptcy protection. Once you do, creditors are generally required to contact your lawyer or another designated party about any matters related to an outstanding debt balance.
When you are stressed, it can cause you to eat fatty food, grind your teeth or develop stomach ulcers. If left untreated, these issues may make it difficult or impossible to focus on work. If you lose your job, it may not be possible to pay the medical bills that you accrued because of the stress your original debts caused. Regardless of how you feel about filing for bankruptcy, it can be an effective way to reduce your stress level and regain both your physical and financial health.
Gaining bankruptcy protection can be one of the best decisions you will ever make for yourself. Although it may have some negative short-term consequences for your credit score, the long-term benefits generally outweigh them. In most cases, you can apply for credit immediately after a case has been discharged. Typically, you can rebuild your credit score in a year or two after your case ends.
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The Law Office of Barbara B. Braziel helps people get out of debt. We offer free consultations to people of Savannah, GA and the surrounding areas, including Richmond Hill, Hinesville, Pooler, Port Wentworth, Tybee Island, Clyo, Ellabel, Midway, Ludowici, Springfield, Pembroke, Brooklet, and Garden City.
We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.