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When is the Right Time to File for Bankruptcy?

There are a number of factors that will play into the decision of if and when you should file for bankruptcy. Typically, folks wait until the last minute and only after they have exhausted all other options. This makes sense because no one “wants” to file for bankruptcy. It simply ends up being the best option out of a list of bad options. But it is still the best option in many cases, and you must do what is best for you.

Folks declare bankruptcy at different times for different reasons. Often, there is some event or threat that goes hand-in-hand with a bankruptcy filing. In this article, we will cover some of the basic reasons you might consider bankruptcy.

You are Facing Creditor Lawsuits

This is one of the most common reasons that individuals and married couples file for bankruptcy. When creditors are in the process of filing lawsuits against you, they must inform you first that a lawsuit is imminent. In these cases, defendants rarely have an honest defense to the lawsuit. In most cases, they don’t even show up to the hearing. When that happens, the creditor wins a judgment against the debtor, and a lien is automatically attached to any real estate they own. The lien is a serious problem because the debt must be paid before the lien is removed. It can be difficult to sell a home with an active lien on it. Buyers and agents may shy away from a “title-clouded” home. If the home is sold, then a portion of the proceeds would go directly to the creditor to repay the debt. In other cases, wages can be garnished and bank accounts levied. To protect yourself against this inevitability, bankruptcy is an option. 

Filing for bankruptcy would immediately stop the lawsuit in its tracks and prevent the creditor from getting a judgment against you. This would also prevent a lien on your home or the garnishing of wages. So, when facing lawsuits, bankruptcy is, in many cases, better than allowing the creditor to win the suit.

Saving Your Home

When you are facing serious debts, there is a risk that you will not be able to pay off the most important bills. This includes mortgage payments. If your home is at risk, there may be different ways that bankruptcy can help. You would not necessarily lose your house simply by filing for bankruptcy. Chapter 13 offers options that help those with mortgage debt save their house. Chapter 7 can also be an option in some cases because it allows you to discharge non-secured debt, such as credit cards and loans, that may be eating into your finances. 

Contact an Indiana Bankruptcy Attorney Today

Chris Arrington represents the interests of Indiana residents who are facing creditor lawsuits or at risk of losing their homes. We can help you prevent a lien from getting placed on your property and avoid the worst outcomes of serious debt. Call our office today to schedule a free consultation, and we can discuss your next moves immediately. 


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