Thomas F. Miles, Attorney and Counselor at Law
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How to know when to file for bankruptcy

Financial problems are difficult to deal with, for both individuals and families living in California. It can be hard to know how to address these problems, and most people will try a number of things to regain control over their finances. For many, however, the swiftest and most straightforward path toward stability is to file for bankruptcy. Knowing when to take this step can be a challenge.

One set of circumstances that provides a strong incentive to file is the accumulation of significant levels of medical debt. In fact, some statistics suggest that as many as 78 percent of bankruptcy cases are due at least in part to high levels of medical debt. For individuals who have faced a serious illness or injury, personal bankruptcy can lead to the elimination of existing medical debt. It is important to understand, however, that bankruptcy only addresses debts that have already been accumulated. If it seems as if additional medical expenses will be incurred, it might be wise to postpone filing until one's health has been restored.

Another motivating factor in the decision to file for bankruptcy comes when one's former spouse has filed. Even in cases in which one's divorce decree listed the other party as responsible for paying a debt, the creditor can still collect from both parties. In this way, if a former spouse files for bankruptcy, creditors can then turn to the other party who was originally listed on the account and attempt to collect. In some cases, the best course of action is for both parties to file joint bankruptcy in order to remove all obligation to pay certain debts.

These are just two examples of instances in which the decision to file for bankruptcy is the clear choice. There are plenty of other circumstances in which individuals or families would be wise to pursue bankruptcy protection. Each case is unique, and those in California who are considering whether bankruptcy is the right choice should take the time to meet with a bankruptcy attorney to discuss all of the available options.

Source: Go BankingRates, "5 Signs It's Time to File for Bankruptcy", Morgan Quinn, Feb. 18, 2015

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Thomas F. Miles, Attorney and Counselor at Law
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