Do You Have to Be Behind on Your Bills to File for Bankruptcy?

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Do You Have to Be Behind on Your Bills to File for Bankruptcy?

As Philadelphia bankruptcy attorneys the most common mistake we see people making is waiting too long to file bankruptcy. Fear keeps a lot of people from facing their financial situation head on and seeing it for what it is.

Most people wait until every bill is behind schedule, interest is accruing at an alarming rate, the house is in trouble, the car is on the verge of foreclosure, and creditors are calling 24/7. They may even wait until they are facing a creditor lawsuit. But as it happens, if you have a very good understanding of your financial situation you don’t have to wait that long. You can file bankruptcy before you are behind on even one single bill.

Other Signs and Symptoms of Financial Distress

You may be current on your bills, but if you look at your financial situation and discover any of the following you might want to think about filing right now:

  • You are current on your bills, but you’re only paying the minimums.
  • You’re living paycheck-to-paycheck, saving no money, and are juggling multiple creditors.
  • You’re starting to reach for your credit cards to pay for groceries or utility bills.
  • Your interest rates have suddenly shot up.
  • You’ve started to ignore unexpected bills like doctor’s bills and dentist’s bills, because you can’t pay them anyway.

These are the early warning signs. See any of these and you wouldn’t be wrong for putting in a call to our offices. In fact, retaining us and starting the process right now can save you a lot of financial distress later on, and make it easier to start over.

Consequences of Waiting Too Long

USA Today ran an interesting article which ran the numbers on delaying the bankruptcy process. They found filers who waited longer had half the assets of filers who decided to start the process early.

Your credit score will have less time to tank as well. Waiting too long can make your credit score plunge. Filing bankruptcy can raise your credit score by up to 80 points. But a credit score of 380 is still a low credit score. Filing earlier, while your score is higher, could mean coming out ahead in the long run.

Filing early could also free up resources to help you stay current on bills you can’t discharge (or discharge very easily) such as student loan debt, alimony, child support and some tax debt. This is a great idea, since these debts aren’t going away anytime soon. You may even start to make progress in paying down these balances, as you might not have to stick to minimum payments any longer after you’ve reorganized your debts and gotten a fresh start.

Finally, filing early means making room in your new budget for one of our bankruptcy payment plans becomes more feasible. Filing for bankruptcy isn’t free, but we try to make it as easy as possible.

Your Next Steps

Start by taking a good, long look at your budget. If necessary, use a good budgeting software. This should help you see if your household is exhibiting any of the early warning signs of bankruptcy. If you are not sure you want to file yet ask yourself honestly if you can find ways to make more money or to cut expenses. If you can’t find any wriggle room it may be time.

If you decide it’s time to file bankruptcy, call our office for a free consultation now.

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