How Much Debt Is Too Much Debt? 5 Signs You Should Consider Bankruptcy

About Me
Recovering from a Business Failure

I’ve always admired entrepreneurs. Because of the financial risks they take, I think they are courageous people. Due to my timid nature, I never imagined I’d be one myself. But, after leaving a successful career in accounting a few years ago, I decided to launch my own home based business. So far, I’ve enjoyed success in this amazingly rewarding venture. Sadly, many entrepreneurs don’t experience the same type of success I’ve found. If they operate sole proprietorship or partnerships, their personal assets are often at risk when their business interests fail. On this blog, you will discover how a bankruptcy attorney can help a business owner who can’t pay his or her business debts.

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How Much Debt Is Too Much Debt? 5 Signs You Should Consider Bankruptcy

21 July 2018
 Categories: , Blog


If you feel like you're treading water with your debt, it may be that you just have too much of it. It may be time to declare bankruptcy. Of course, bankruptcy is a drastic step, so it isn't one to take lightly. Here are a few signs it might be right for you.

1. Your Debt Isn't Going Down

Are you paying minimum payments on your debts? If so, it's likely that your debt isn't going down at all, or is going down minimally every month. If you aren't making any headway on your debt balances, you could be left paying it off forever.

2. Your Credit Rating is Poor

The primary impact of bankruptcy will be damaging your credit score. If your credit score is already very bad, there's very little reason to avoid declaring bankruptcy. Your credit score will slowly improve after declaration.

3. Your Debt is Unsecured

Debt such as mortgages, car loans, and school loans are considered "good debt." They usually don't count against your credit score significantly and can be seen as good by creditors. Debt like personal loans and credit cards are "unsecured" debt. They're bad debts that will adversely impact you. It's better to wipe these debts out entirely.

4. Your Interest Rates Are High

If you're paying over 20% in interest on your credit cards, you're losing a lot of money every year just by not paying off the debt. This is money you could be saving and setting aside if you declare bankruptcy. Even if your credit score may be damaged, you'll be able to build up cash reserves over that time, and potentially buy a home in the future.

5. You Don't Have Assets to Protect

A bankruptcy does usually require the liquidation of any assets that you have. However, if you only have one car and one house, you'll likely be allowed to keep them. On the other hand, if you have some other significant assets, such as a personal business, multiple cars, or multiple houses, declaring bankruptcy is a more significant step. It could still be the right choice, but it will have greater consequences on your life.

What are the consequences of declaring bankruptcy? In actuality, most of the consequences of declaring bankruptcy will be fairly minimal after the first few years, with the bankruptcy itself dropping off your record after seven years. You can begin the process now towards a better financial future. For more information, contact your local bankruptcy attorney.