No one dreams of the day they have to start looking for bankruptcy lawyers. However, it's important to contact a bankruptcy attorney once the facts of your financial situation call for it. If you're unsure if you need to file for bankruptcy, here are four potential signs.
Not Paying Down Principal
This is one of the biggest signs it might be time to speak with a bankruptcy lawyer. If you're only keeping up with interest payments and not paying down the principal on your debts, that's a bad situation. Loans, credit cards, and other accounts will simply lurk. Worse, the amount you owe can end up growing if even one or two small things like medical bills or vehicle expenses happen.
Much of the point of bankruptcy is to help people who can't see the light at the end of the financial tunnel. If you can't imagine how you'll ever get your debts paid off, it's probably time to consult with a bankruptcy attorney.
Can't Find Work
Maintaining an income is just as important as paying down debts. If you don't have the financial resources to make payments, you have to consider bankruptcy. Especially if it has been months since you've had work, you can't assume things will turn around soon. Even if you do get back to work soon, your debt load may still be unmanageable. You can present unemployment as grounds for bankruptcy if you're unable to pay things down with your current resources.
Major Unpaid Medical Expenses
Facing large medical expenses can compound your financial troubles. If you're facing collection notices on huge amounts of unpaid medical expenses, it may be time to explore bankruptcy. This is particularly true if you're suffering from continuous medical issues that are likely to add to the pile.
Foreclosure or Repossession Actions
A bankruptcy case comes with an automatic stay. This means the court will block all collection actions against you. If you're sure that a creditor is about to foreclose on your house or repossess your car, filing for bankruptcy may buy you some time.
Notably, the judge can't block anything another court has already granted. If the bank gets an order allowing it to foreclose on your home, for example, the bankruptcy court can't halt that action. Consequently, you want to file as soon as you're worried that a foreclosure or repossession could happen.
Also, a home loan is considered "underwater" when the market value of the house is less than the total the borrower has paid. You can ask a bankruptcy judge to declare the loan underwater and effectively wipe out the debt.