Hello, this is your boy Ivan Hall, the credit king. Nobody wants to make the decision of when to file for bankruptcy, but at some point, it may come up. Bankruptcy has a bad effect on your credit, amongst other ramifications.
Your Last Resort
Filing bankruptcy should only be a last resort when all other options have failed you, but when should you consider filing for bankruptcy? You find yourself constantly borrowing from one source of credit to pay off another.
You have begun taking cash advances greater than $500 to pay for living expenses. You borrow to meet regular expenses like food and utility bills. You have stopped answering your phone because the only calls you receive now are from creditors. Creditors are threatening to sue you, or a suit has already been started against you. These are signs that you are indeed in some serious trouble.
Chapter 7 and Chapter 13
These are signs that you may want to consider filing for bankruptcy. Then it comes to the decision of what sort of bankruptcy you need to file for. The most common are chapters 7 and 13. Chapter 7 has the advantages of wiping the slate clean and setting you on a fresh start immediately:
You will be making payments for three to five years, but, as stated before, you should only consider bankruptcy when you have exhausted all other avenues. There are many different alternatives out there to be considered, but if none are practical for your situation, then speak with a professional bankruptcy lawyer to learn what the next step is.