Filing for bankruptcy is a heart wrenching decision. On the one hand you want to do what you promised your creditors you would do, but on the other hand you have to house, feed, and clothe your family and yourself. There is no question that bankruptcy should be the last resort, but as to whether you should file or not, my classic lawyer answer is “It depends.”
First, we need to look at why you are considering filing bankruptcy. The most common reasons are the following:
- Are you behind on payments on your house and/or car and being threatened with foreclosure and/or repossession?
- Are you using credit cards frequently to supplement your income with cash advances or purchases of necessities such as groceries and payments of utility bills?
- Has your house been foreclosed on or have you had a vehicle repossessed?
- Do you have more than one credit card maxed out or nearly maxed out?
- Do you have more than $10,000 of debt with credit card companies and/or finance companies?
- Have you frequently been using payday loans and/or check cashing lenders to make it through the next week or two?
- Have you been sued by a creditor and/or are you currently or soon to be garnished?
- Are you getting numerous calls and letters daily from creditors or collection agencies?
- Are you borrowing from one lender to make the payment to another lender, i.e., are your robbing Peter to pay Paul?
- Have you had your license suspended for causing an auto accident where you were not insured?
- Do you have large outstanding medical bills that insurance did not pay and you cannot negotiate a payment you can afford?
If your answer to any of these questions is “Yes”, then it may be a good time to see a bankruptcy attorney. This does not necessarily mean you should file bankruptcy, but it does mean you may need some legal advice. The attorney may suggest some of the following alternatives to bankruptcy:
- Tightening your budget.
- Downsizing homes and vehicles.
- Looking at consolidation loans (and then destroying all credit cards)
- Getting a second part-time job for more income
- Having a stay at home spouse or of age child obtain employment.
- Temporarily getting financial assistance from family or friends.
- Negotiating with creditors.
- Doing nothing.
If any of these alternatives allow the possibility of a LONG TERM solution, then they should be greatly considered even though it may call for tough decisions and hard work. Why? Although bankruptcy can be a “quick fix”, it comes with some serious long term consequences to your financial future.
The bottom line is I and many other bankruptcy attorneys offer free initial consultations, so it will not cost you anything to see what your options are. If after talking to an attorney, you think you can dig yourself out of the hole you are in without bankruptcy then definitely try that. But, if it does not work out you will be prepared and should have a plan.
If you have further questions regarding this or other bankruptcy, debt, or budgeting questions please email me.
