When Should You Consider Filing For Bankruptcy?

When Should You Consider Filing For Bankruptcy?

Any business goal is always to succeed in the busy consumer market, and experience minimal losses along the way. No business ever plans to go bankrupt, however, it does happen sometimes, and not just with businesses; individuals go bankrupt, too. Deciding whether or not you should file for bankruptcy can be quite challenging. 

You or your business could be simply going through a rough patch that you will likely recover from in a little while, or you might be facing a dead-end in terms of finances and debts. This is why it is important to know when exactly the right time would be to consider filing for bankruptcy to save yourself or your business from a lot of hassle you would otherwise face. 
To find out the right time for declaring bankruptcy, you should ask yourself the following questions.

Is This a Temporary Problem?

When you feel like everything is going south, financially speaking, whether you are an individual employee or a business owner, you should pause for a little while and ask yourself, is this a temporary problem that you can get out of somehow? As the specialized San Diego attorneys at https://tlbrownlaw.com/practices/bankruptcy-attorney/ explain, many people go through periods of financial distress— this is especially the case today, due to the global economic distress the COVID-19 pandemic has caused. But you should take the time to analyze whether the phase you are in is merely temporary, and you can get out of it with some hard work, or if it is really a dead-end. In the case of the latter answer, then it is surely time to file for bankruptcy. Declaring your bankruptcy at that point would help you deal with your debts without having to lose everything you own in terms of property and other assets, and you would be able to pay back any debts you already have in a more lenient manner. 

Is it Possible to Negotiate your Loans?

As things start getting rough on you in terms of paying back your debt, you might think that this is the end of the world and that there is absolutely nothing you can do about it other than file for bankruptcy. That feeling could start growing, especially if you are getting harassment calls from lenders or their representatives, constantly nagging you to pay what you owe. However, before you take the final step and file for bankruptcy, you should at least try to explain your situation to the lenders beforehand. Your inability to pay back your debt in full or at the agreed-upon times actually harms the lenders as much as it harms you or your business. That is why when most lenders learn that you are on the verge of filing for bankruptcy, they might end up cutting you some slack and reducing their interest rates to facilitate your payment. If it is not possible to negotiate new terms with your lenders, that is when you should consider filing for bankruptcy.

Would Declaring Bankruptcy Benefit you?

Declaring yourself or your business bankrupt is not exactly a piece of cake. It is a long and, at times, overwhelming process that would take up a lot of effort to finalize. That is why before going through all that work, you should take the time to find out if filing for bankruptcy would do you any benefit. If your debt problems have been going on for a long time and things only seem to be getting worse and worse, then it might be the right time to file for bankruptcy. When you do that, you will find that all the loan collection calls and pursuits will stop, and you would be able to take alternative steps to pay back what you owe. However, you should also realize that this process will not be finished in a day or two. It will require some time and effort, and you will most likely need to hire a professional lawyer to guide you through it. So, you should be certain that you are making the right decision at the right time to secure your financial future. 

Have you Considered All the Alternatives?

Before you decide to file for bankruptcy, you need to be certain that you have exhausted all other alternatives. If you have already checked with your credit company that there is no way for them to alter your payment schedules on your outstanding debt, then you can consider filing for bankruptcy. You should, however, try to consult with a professional financial consultant before taking this step as there might be other ways to salvage your financial situation. In short, filing for bankruptcy should be your last resort.

Are you Budgeting Correctly?

If you do not know where your money is going and are not following a set budget, whether your personal life or business, that could lead you to think that you need to file for bankruptcy when you really do not. As you consider filing for bankruptcy, you should take a step back and analyze your budgeting tactics and spending habits. If you do have a budget, check to see if making some changes to it would help you get out of your financial turmoil before calling it quits and declaring yourself bankrupt. Numerous software programs can help you check your budgeting and whether simple changes could benefit you. If you do your assessment and find that you are still in a difficult financial situation, then it might actually be time to consider filing a bankruptcy claim. 
Declaring yourself or your business bankrupt is not an easy decision to make. It can be quite hard for some people, and many even struggle to know when to file for bankruptcy and whether it would be better to give things a little time in the hope they might improve. Make sure you take the time to assess your financial situation before declaring yourself bankrupt and always seek professional consultancy to ensure you are making the best possible decision for your situation.

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