Holly H. Hines is a bankruptcy attorney in Worcester County, Massachusetts. She is a graduate of Anna Maria College, with a J.D. from Massachusetts School of Law. In this article, Hines explains how far is debt a person needs to be before he or she can consider bankruptcy as an option.
Unfortunately, no one precise number determines whether someone should start thinking about bankruptcy. Because incomes and debt levels can vary so much from person to person, the decision of when to file for bankruptcy is different for everyone.
For example, you may have an individual or an elderly person living on a fixed income. But, if he has $15,000 in debt, then that may be too much for him to manage on a fixed budget like that. After taking into account all of the necessary living expenses that he can’t do without, a person living on a fixed income might definitely decide that bankruptcy is the right option to alleviate some of that debt, even if like I said, it is only $15,000.
Meanwhile, you might also have a married couple who has a combined income or a joint income of $100,000 or more. So for them, the level of debt they might take on before determining that something is wrong could be much more than what it would be for someone living on a fixed income. This couple might decide that what they have taken out for a mortgage and car loans, things like that, is just way too much for their budget to handle. So they are suddenly in the same situation as the person living on a fixed income, where bankruptcy filing might now be their best option.
I think what happens is that as soon as people realize that they do not have enough money in their budget at the end of the month to cover all of the bills they have stacking up, they know then that something has to give.
Usually most people will continue to make payments on their necessities like their mortgages or rent, car payments, utilities, and food. And then things like credit card debt, personal loans, payments on loans for second cars and second homes are the next to go. Those luxury things are usually what people stop making their on-time payments on first.
As a bankruptcy attorney, I see people from all walks of life coming in to file for bankruptcy. And the length of time that someone waits to begin the process, based on when they first realized they were in trouble, can really vary.
Some people decide to wait and see how bad their financial situation gets before making that first phone call for help. Other people are a little more proactive about it, so they might call sooner.
Most people generally realize that if they just lost a job — especially in a household where the husband is the main earner and the wife is only working part time, and if he is the one who just lost a job — they will go from a nice income to a fixed-income that is coming from unemployment benefits.
So if the part-time wage earner does not have enough money to support the family on that one salary alone, plus the unemployment benefits that the other spouse is getting, then most people realize that they are not going to be able to meet all of their financial obligations given their current financial circumstances.
So there are many cases where couples decide to be proactive and call for help as soon as the main wage-earning spouse loses his job, and as soon as they know that there could be a problem. But obviously, that differs from person to person based on the situation he is going through at the time.
For anyone who isn’t sure whether the financial situation they are in warrants a bankruptcy filing, I would certainly recommending calling an attorney and finding out if bankruptcy could help.
This article is for informational purposes only. You should not rely on this article as a legal opinion on any specific facts or circumstances, and you should not act upon this information without seeking professional counsel. Publication of this article and your receipt of this article does not create an attorney-client relationship.
