Bankrupcy is a scary concept for many people. The point when a person might want to consider filing for bankruptcy can be hard to distinguish. Some people might think, that if they can just hold out for another month, things will improve. They will work overtime for another month, or they might find a second job, all in hopes of being able to pay off their debt.
However, some people might find themselves in a situation where they haven't paid their mortgage in months or even years, they have thousands of dollars in credit card debt, and only pay their minimum monthly payments using loans from their retirement accounts. These situations can quickly snowball out of control.
When a person can't afford the minimum monthly payments, they might want to consider bankruptcy. While a bankruptcy will damage a person's credit score, many times not paying bills or a having a foreclosure can have similar outcomes on a person's creditworthiness.
Bankruptcy is a legal route for many people who will never be able to pay off their debt, to get debt-free and refresh their financial wellbeing. Sometimes it can be more beneficial to declare bankruptcy and start to rebuild financially than it would be to wait. Waiting, in hopes of paying off an immense amount of deb,t could result in foreclosure, lawsuits by creditors and more difficult situations that could complicate the effectiveness of a bankruptcy. If someone is having difficulty paying off their debt, they might be wise to speak with an experienced bankruptcy attorney.
Source: CNBC, "The good thing about bankruptcy," Sakina Spruell, Oct. 21, 2013