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Signs that bankruptcy may be the best way out of debt

Many people overwhelmed by debt are in denial about their chances of becoming solvent again. Even though their personal debts are growing uncontrollably, they try to manage the problem alone. This attitude may seem seem to embrace the American ideal of individualism, but it actually can be counterproductive to getting out of debt. Tennessee residents facing such monumental financial challenges should consider that bankruptcy may be their only real way out.

Several signs indicate that a debtor has reached a point of no return. Skipping payments is one. Being unable to make even the minimum monthly payments toward debts means that the debt has become a sort of financial quicksand. This is especially the case when larger payments, such as mortgages and auto loans, cannot be met, as well. Being ineligible for debt management or counseling is another sign. This means a person does not have sufficient income and assets to even qualify for help in drafting a workable plan to get out of debt.

Relying too much on credit cards is another sign of financial distress. Meeting basic needs with plastic means trouble. This often leads to another sign of distress: maxed-out credit cards. A more persistent sign is the start of collection notices and calls from creditors. When this type of harassment starts, ending persistent creditor contact can be difficult. Other signs of financial ruin ahead are resorting to the use of high-interest loans, using up available forms of home equity and becoming completely unable to bounce back from any sort of financial setback.

Fortunately, no one has to have a complete financial meltdown before getting out of trouble. Bankruptcy is a legally sanctioned and respectable way to get out from under crushing debt. Chapter 7 bankruptcy, for example, offers a way to get out of debt and start over financially. Anyone who faces such dire circumstances should consult with a bankruptcy professional on how to file for Chapter 7.

Source: The Arizona Republic, "7 warning signs you're heading towards bankruptcy," Russ Wiles, Aug. 4, 2014

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Kenneth C. Rannick, P.C.
4416 Brainerd Road
Chattanooga, TN 37411

Phone: 423-954-7180
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