When Should You File for Bankruptcy? Signs You Shouldn’t Ignore

by Luke Homen

No one plans to end up in overwhelming debt, but life happens. A job loss, medical emergency, divorce, or unexpected expenses can quickly spiral into a financial crisis. If you’re struggling to keep up with bills and creditors won’t stop calling, you might wonder: Is it time to file for bankruptcy?

Bankruptcy isn’t a decision to take lightly, but in some situations, it’s the best way to get a fresh start. The key is recognizing the warning signs early so you can take action before things get worse. 

At Convenient Bankruptcy, our Oklahoma bankruptcy lawyers help people just like you take control of their finances. If you’re facing wage garnishment, constant creditor calls, or overwhelming bills, it might be time to consider your options. Learn more about the signs you shouldn’t ignore and how we can help.

Warning Signs That Bankruptcy Might Be the Right Choice

While everyone’s financial situation is different, there are some clear indicators that you might need to consider bankruptcy. If any of these sound familiar, it’s time to take a closer look at your options.

You’re Only Making Minimum Payments (or No Payments at All)

If you’re barely covering the minimum payments on your credit cards or loans, it’s a sign that your debt is outpacing your income. Even worse, if you’ve stopped making payments altogether, late fees and interest will quickly add up, making it even harder to catch up.

Bankruptcy can help eliminate or restructure your debts so you can get back on track financially.

Creditors Are Calling Nonstop

When you start falling behind on payments, creditors don’t just forget about you. You may receive constant phone calls, emails, and even letters demanding payment. If you’re feeling harassed or overwhelmed, it’s a clear sign that your debt is becoming unmanageable.

Once you file for bankruptcy, an automatic stay goes into effect, which legally stops creditors from contacting you, garnishing your wages, or taking legal action against you.

Your Wages Are Being Garnished

If you owe a significant amount of debt and have ignored collection notices, creditors can take legal action to garnish your wages—meaning they take money directly from your paycheck before it even reaches your bank account.

This can make it nearly impossible to cover basic living expenses. Filing for bankruptcy can stop wage garnishment in many cases, giving you room to breathe financially.

You’re Using Credit Cards to Cover Basic Expenses

Credit cards should be used for convenience, not survival. If you’re relying on credit cards to pay for groceries, gas, or rent because you don’t have enough cash, it’s a sign that your financial situation is unsustainable.

Many types of bankruptcy can eliminate credit card debt, helping you start fresh without the burden of high interest balances.

You Have No Savings and No Emergency Fund

Everyone should have at least some savings for emergencies, but if you’re living paycheck to paycheck with nothing set aside, you’re walking a financial tightrope. One unexpected expense—like a medical bill or car repair—can push you over the edge into deeper debt.

You’re Behind on Your Mortgage or Facing Foreclosure

If you’re struggling to make mortgage payments and your lender is threatening foreclosure, bankruptcy might be an option to help you keep your home.

A Chapter 13 bankruptcy can allow you to restructure your debt and catch up on missed mortgage payments over time. In some cases, Chapter 7 bankruptcy may delay foreclosure, giving you extra time to figure out your next steps.

You Have Medical Bills You Can’t Pay

Medical debt is one of the most common reasons people file for bankruptcy. Even with health insurance, a serious illness or accident can leave you with thousands—or even hundreds of thousands—of dollars in bills. Bankruptcy can help eliminate medical debt, allowing you to focus on recovery instead of worrying about how to pay off hospital bills.

You’ve Taken Out Loans from Family and Friends

If you’ve borrowed money from loved ones to cover expenses, it’s a sign that your financial situation is beyond your control. While borrowing from family can provide short-term relief, it’s not a long-term solution—and it can strain important relationships.

You’re Considering a Debt Settlement or Consolidation Loan

If you’ve looked into debt settlement or consolidation loans but don’t qualify, bankruptcy might be the better option.

Debt settlement companies often promise to negotiate your debt, but they typically charge high fees and may not succeed in lowering your balances. Consolidation loans can help if you qualify for a low interest rate, but many people struggling with debt don’t meet the credit requirements.

When Bankruptcy Might Not Be the Right Choice

While bankruptcy can be a powerful tool, it’s not always the best solution for everyone. Here are some situations where you might need to explore other options:

• Your debt is mostly student loans. Student loans are difficult to discharge in bankruptcy unless you can prove undue hardship.  It can be done under the right circumstances, but there is a high standard to meet.
• You have tax debt. Many tax debts can’t be eliminated in bankruptcy, though there are exceptions, especially for older tax debts.
• You can pay off your debt with lifestyle changes. If you can adjust your spending habits, take on extra work, or negotiate with creditors, bankruptcy might not be necessary.
• You recently filed for bankruptcy. If you’ve already filed for bankruptcy in the past few years, you may not be eligible to file again right away.

If you’re unsure whether bankruptcy is right for you, speaking with an experienced Oklahoma bankruptcy attorney can help you understand your options.

Contact Our Oklahoma Bankruptcy Lawyers Today

If you’re drowning in debt and wondering if bankruptcy is the right choice, you’re not alone. Many people wait too long, hoping things will get better—but sometimes, filing for bankruptcy is the smartest way to get a fresh start.

At Convenient Bankruptcy, we understand how stressful financial struggles can be. Our experienced Oklahoma bankruptcy attorneys are here to guide you through the process and help you find the best path forward. Call us today at 405-639-2099 or submit a contact form.