When is it Time to File Bankruptcy?

time to file bankruptcy kansas city

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Most people consider filing for bankruptcy as a last resort.  Often, that’s the most prudent thing to do.  However, there are some warning signs that may indicate that your debt load is more than you can handle and it may be time to file bankruptcy.


Payday Loans

If you are considering getting a payday loan, you may be better off filing bankruptcy.  Payday loans are high-interest, short-term, unsecured loans.  These types of loans often target those with poor credit history and often charge interest at over 100%.  The lure of these types of loans is the ease in which they are obtained and the speed in which the funds can be received.  The danger, however, is that the amount repaid is many times greater than the amount borrowed and these lenders often require bank account access.  This allows them to collect whether the funds are available or not.  Sometimes the only way to get out of payday loan debt is to file bankruptcy.


Getting sued by a creditor is another warning sign that your finances are in trouble.  Creditors file lawsuits to obtain judgments, which make it much easier to collect on a debt.  A creditor with a judgment can garnish wages, freeze bank accounts, and attach a lien to your real estate.  If a lawsuit is filed against you, you will receive notice from the court that there is a pending lawsuit, and you will have some deadlines to meet to protect your rights.  What a lawsuit should also tell is that it may be time to consider filing bankruptcy.


If you wait too long after a lawsuit is filed, that lawsuit could turn into a garnishment.  A garnishment is the attempt of a creditor to collect on a judgment against you.  A judgment creditor can collect against wages, bank accounts, and other funds owed to you.  A garnishment doesn’t care if you need that money to pay rent or buy food, and wage garnishments can last for months or longer.  Many times filing bankruptcy is less expensive than being garnished.

Revolving Credit Balance

Another warning that it may be time to file bankruptcy, is if your revolving credit account balances are not decreasing.  Revolving credit includes credit cards and other lines of credit.  If the balances on these accounts stay the same month after month, or if they increase, that is a warning of financial trouble.  There is nothing wrong with using credit responsibly.  However, if credit balances consistently increase, or never decrease, that means more money is going out than coming in, and something needs to change.  Bankruptcy may be that change that needs to take place in order to take control of your finances.

For questions about bankruptcy, contact W M Law today!


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Jeffrey L. Wagoner


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