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Five situations when filing for bankruptcy may be the best option

An Appleton, Wisconsin, resident whose debts exceed their ability to pay may consider filing for bankruptcy. It is not always easy to judge when one's financial situation is serious enough to file for bankruptcy protection. Here are five definite signs for judging when filing bankruptcy may make sense.

If one is elderly with little or no income and a lot of debt, then filing bankruptcy to pay medical bills and other necessary expenses may make sense. A resident is eligible for filing bankruptcy if his or her average monthly income or pension is less than the state median income. Social Security income is not counted in determining eligibility for bankruptcy.

Those with large medical debts not covered by health insurance may consider filing for bankruptcy after medical treatment has finished. It's important that no more medical expenses be incurred because those incurred after filing may not be discharged.

If one's credit card debt is so high that minimum monthly payments cannot be met, it's probably time to file for bankruptcy. If one's debt exceeds the total value of one's assets, declaring bankruptcy may be a smart option.

If an ex-spouse has declared bankruptcy and the couple has jointly owned debt, it might be necessary for the other spouse to file for bankruptcy if that spouse cannot afford to pay the debt. Often settling unpaid bills and paying legal fees after divorce can lead to financial disaster, especially if debt is jointly owned.

Finally, long-term unemployment may cause an insurmountable deficit of income. Filing bankruptcy may be an unemployed worker's only option to right his or her financial ship.

If one is still unsure whether to file, it may help to talk to an attorney with extensive experience in bankruptcy law.

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

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