5 Signs of Bankruptcy
Being hesitant about a bankruptcy filing is nothing but natural. After all, declaring bankruptcy will have a profound effect on your future. In certain instances, however, bankruptcy is inevitable. Is an Arizona bankruptcy filing your only option for debt relief? The answer is yes if at least one of the following applies to you.
You Are Facing Wage Garnishment
Wage garnishment is one of the tools that creditors will use in order to collect sums you owe.
Put in simple terms, wage garnishment is the “freezing” of your salary. As per Arizona law, your employer will have to withhold a certain portion of your salary each month and this sum will be used to pay off debt.
The problem is that once a creditor wins a court case against you and ensures wage garnishment, you will find it much more difficult to pay off any other outstanding loan balance. Thus, wage garnishment will potentially get you into even more financial trouble than what you’re already dealing with.
When you do a bankruptcy filing, you benefit from the automatic stay that prevents wage garnishment. The garnishment will be discontinued, giving you a bit of financial relief.
You Are Being Sued
When you fail paying debt for a long period of time, a creditor will most probably take legal action against you.
Creditor lawsuits mark the beginning of an aggressive campaign that could lead to your assets being seized for the purpose of paying off debt.in addition, such legal action will typically lead to wage garnishment, as well.
Once again – the Arizona bankruptcy filing grants you legal protection. See a bankruptcy attorney right now if some of your creditors are threatening to sue you or they’ve already undertaken the first steps in the process.
Other Options Have Been Employed (and They Failed)
You can attempt to handle debt in a few alternative ways that don’t involve a bankruptcy filing.
It’s possible to negotiate with creditors and reach a debt settlement agreement. This means that a creditor may agree to a more lenient repayment plan. It’s also possible for them to opt for a lump sum payment that will still be lower than the entire outstanding balance.
Debt consolidation is another possibility you should consider.
Often, creditors will be more willing to opt for such possibilities than a formal bankruptcy filing. Bankruptcies come with higher legal expenses and with lower balance payments.
If you’ve already employed such strategies but you still have to pay back large sums, bankruptcy will be your only option. The same applies to situations in which creditors are not willing to work with you on debt settlement.
The Risk of Losing Your Home Is High
Do you prefer to lose your home or to do a bankruptcy filing? The answer is obvious, isn’t it?
People who cannot keep up with mortgage payments face the viable risk of foreclosure. In such instances, a bankruptcy filing may be the only way to save your home.
In Arizona, you are entitled to bankruptcy exemptions in the case of a Chapter 7 filing. This means you’re not going to lose the home you live in, regardless of the fact that assets will have to be liquidated for the purpose of paying off debt.
You Are Dealing with Long-Term Unemployment
Sometimes, life circumstances make it impossible to face and address financial challenges.
People who are currently unemployed and who don’t see employment possibilities in the future should definitely consider a bankruptcy filing.
It’s easy to determine whether you should be filing. If you cannot pay your bills, you don’t have any savings or retirement, you will need to see a bankruptcy attorney as soon as possible. Bankruptcies will affect your credit score but they will help you eliminate the debt that you’re drowning in. Getting a clean slate will enable you to rebuild your life and be much more fiscally responsible in the future.
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