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Signs that bankruptcy might be a good option

Many Escondido residents know that filing for bankruptcy may be a useful option when financial challenges become overwhelming. Chapter 7 bankruptcy, in particular, is a good option to discharge debt for those who qualify. But, if an Escondido resident's finances aren't suddenly impacted by expenses caused by an unexpected medical condition or savings evaporating due to job loss, how does one know that the household finances are heading toward the point where considering bankruptcy might be a good idea?

In a recent article, several signs were pointed out. The first sign has to do with a person's overall debt load - do you even know the total amount of debt you owe? If not, that may be a sign that the debt burden has grown out of control and needs to be addressed. Next, Escondido residents are encouraged to look specifically at credit card debt. It is not uncommon to carry over credit card debt on a month-to-month basis, but is the overall balance so high that you can only make the minimum payment? If so, it may be time to examine whether you qualify for debt discharge through a bankruptcy filing.

And speaking of credit cards, what are they used for? Most people will typically pay directly for necessities like groceries and utility bills - they'll pay cash, write a check or use a debit card that draws on a bank account. So, if you are using credit cards to pay for necessities, it may be a sign that you don't have the funds to cover basic needs.

Lastly, what kind of contact are you having with debt collectors? Have you missed payments or made late payments to the extent that you are receiving phone calls and letters regularly? If so, this may be a sign that your finances could use a fresh start through a bankruptcy filing.

Source: Deseret News, "Financial Tips & Tricks: When is bankruptcy the best option?," Andrew Clawson, June 21, 2016

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