Timing could make a big difference in the outcome of a bankruptcy. The longer a Texas individual or couple waits to file bankruptcy after they know they are in financial trouble, the harder it could be to recover. According to data from the Consumer Bankruptcy Project, two-thirds of the people who eventually file for debt relief struggle for more than two years with bills they are not able to pay.
Waiting may cause a person to have half the assets and a 40 percent higher debt-to-income ratio that those who file for bankruptcy right away. It could reduce the benefits bankruptcy offers to people who need a fresh financial start. After years of depleting their assets making increasing minimum payments, dealing with lawsuits from creditors and even skipping meals to pay debts, it could be challenging for people to regain their financial footing even after bankruptcy.
Instead of struggling for years, people should consider bankruptcy as soon as their debts consume 40 percent of their income. When the debts that are causing financial distress could be discharged through bankruptcy, it may make sense to eliminate them right away, rather than attempt to pay them by getting new credit cards or personal loans. Forgoing essentials like medical care or food is a clear indicator that it's time to seek relief from overwhelming debt.
People often delay filing for bankruptcy relief because doing so means admitting they were unable to manage their debt. An attorney who focuses on bankruptcy law may be able to advise clients about whether the time is right to seek relief or if other options might be more appropriate for them. When they file at the right time, people with overwhelming debt may get a true second chance at managing their finances successfully.