Bankruptcy is a protective measure which enables debtors to a "start fresh" by eliminating debts in order to become productive again.
By clearing the table of overwhelming debt and high interest rates most debtors are able to take control of their finances and start anew.
One of bankruptcy's most powerful tools is the automatic stay. The automatic stay instantly puts creditors at bay. The automatic stay is the financial equivalent to a restraining order which prevents creditors from taking collection actions. Creditors will no longer be able to call and harass you, file a judgment against you, attempt to repossess any of your property, attach any garnishments to your wages or bank accounts, or anything else that would amount to an attempt to collect debt. This powerful tool against creditors becomes effective the instant you file bankruptcy with the court.
However, the automatic stay has some limitations. Criminal actions cannot be stayed, nor can alimony or child support payments. In cases involving evictions a tenant should file prior to the landlord's action for eviction in order to prevent the eviction.
2. Change in income
3. Auto Repossessions
4. Unpaid Medical Bills
6. Financial Hardships
7. High Interest Loans
10. Tax Levies
The right time to file really depends on each individual debtor's personal circumstances. When debts become overwhelming large creditors, will begin to take action to collect on the debt such as filing liens, attaching garnishments, and destroying your credit score. When these types of situations appear to be eminent the time to file is now. If the debt seems to be manageable and you can see yourself paying them off within six months filing bankruptcy may not be in your best interest. Conversely if debts are at the point where looking ahead six months you would be unable to pay off the debt, even without accruing more debt to that account, then filing bankruptcy should strongly be considered.