Being fully drowned in debts and not having any resources to clear these debts can turn into a nightmare situation for any person or business. The most common solution in such a case is filing for bankruptcy. It is an official declaration that you are unable to pay off your debts due to financial inability.
As most professional bankruptcy lawyers will agree, it is advised to file for bankruptcy the moment you believe you won’t be able to repay what you owe.
Avoid The Financial Sweatbox
The “financial sweatbox” refers to the period before bankruptcy is filed. It is highly advisable to get out of the sweatbox as quickly as possible to as debt collection lawsuits can be filed against the borrower.
There is a negative stigma attached to bankruptcy and this is why many tend to prolong the process. However, getting out of the financial sweatbox should be the main priority so you can start over as quickly as possible.
The Right Time To File For Bankruptcy
The right time to file for bankruptcy is simply when your debt becomes unmanageable.
An unfavorable debt-to-income ratio is one of the first signs that it may be time to consider bankruptcy. Your debt-to-income ratio is the sum of your monthly payments divided by your pre-taxed income. Ideally, what you owe should be less than 40% of your income.
The most obvious sign that its time to file for bankruptcy is when you are taking out new loans to pay off old debts. At this point, you’re only digging a grave that you’ll never get out of.
Speak To The Bankruptcy Attorneys At Lydecker
At Lydecker, we can help you start with a clean slate from neverending debt and put a rest to the constant harassment from creditors.