Deciding when to file for bankruptcy is a personal and often difficult decision. But it’s an important one that could help you on your path to rebuilding your finances. Bankruptcy attorney Xue Connelly shares her expertise on identifying the right time to file for bankruptcy

“Most people try and put off bankruptcy,” says Connelly. “They don’t want to file because they’re either afraid, or they don’t want to admit that they are in a bad financial situation. So instead, they tend to bury their heads in the sand.” 

People often try to postpone filing for bankruptcy by:

  • Taking money out of their 401k
  • Negotiating their debt
  • Trying to consolidate their debt
  • Taking out personal loans to cover their debt

“While bankruptcy, unfortunately, has a lot of negative connotations,” Connelly says, “in reality, it’s a federal program designed to help Americans climb out of debt and embark on a new beginning. So, if you’re feeling overwhelmed and can’t make your payments, it’s important to speak with an experienced attorney who can help you navigate the situation sooner rather than later. Otherwise, if you continue on and can’t make the payments, you’re going to be stuck on a wheel until you dig yourself into a deeper hole. Eventually, you could find the sheriff knocking on your door with a warrant informing you that someone is suing you for the money you owe, in which case you’ll have to go to court. At that point, while filing bankruptcy is still likely the best option for you, you’ll be forced to work within the creditor’s timeline, which may put you at a disadvantage.”

Alternatively, if you have a bankruptcy attorney access your situation earlier, you’ll have more control over your own timeline and you won’t be forced into a corner by a creditor’s actions. Instead, you’ll be able to make the decision yourself and take control of your life. 

Connelly explains, “My job as a lawyer is to make sure that after filing for bankruptcy, my clients are on solid financial footing. I’m able to do that by making sure my clients know that they’re not in this alone, that I am here to help, and that there are programs that the government and courts have set up to overcome this situation.”