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When should I consider filing bankruptcy?

Many Americans have faced serious financial setbacks this year. Perhaps, you lost your job and already were struggling to pay off your medical debt. Or you can’t find a job that pays you enough to keep up with your bills and you are struggling with increasing credit card debt.

You may feel like your debt is overwhelming and you are tired of dealing with harassing calls from creditors. Should you consider filing for bankruptcy? If not now, when?

You may want to file bankruptcy sooner rather than later. Here are some of the reasons why:

  1. You can stop harassing creditor calls with an automatic stay. Creditors can’t call you about your debt when you file for Chapter 7 bankruptcy because that debt likely will be wiped out. With Chapter 13, harassing calls stop because you will set up a payment plan for your debts.
  2. You can start rebuilding your credit sooner. Most likely, if you are struggling with overwhelming debt, you don’t have a great credit score. While bankruptcy will lower your credit score significantly at first, you can rebuild it – and faster than you may think. According to recent FICO research, Chapter 7 bankruptcy filers had credit scores of 620 or above within four years of filing.
  3. You can reduce your stress level by reducing your debt through bankruptcy. Reducing your stress and bettering your mental health can help you move forward more effectively.
  4. You can learn to manage your finances better now, especially if you seek a Chapter 13 bankruptcy where you will repay some of your debt within three to five years.

Sometimes, having overwhelming debt takes a big toll on your mental health, your relationships and more. Seeking bankruptcy can give you a fresh start. Consulting a bankruptcy attorney about your options is the best way to make the first step toward a better future through debt relief.