Our very first piece of advice: DON’T BE AFRAID OF BANKRUPTCY! It isn’t a moral failing; it is nothing more than a sound business decision. Bankruptcy is designed to give the honest person a fresh start.
When should you file for bankruptcy? In a nutshell, when you are in an overwhelming, no-way-out financial situation. This might include huge, unanticipated medical expenses, a weather-driven catastrophe, job or career loss, death of a working spouse, spiraling mortgage interest rates or other major financial burden. In such cases, just trying to catch up, throwing good money after bad, may only worsen your economic situation and damage your credit score. It’s time to deal with the problem straight-on: declare bankruptcy, clear the slate, and start over again.
Why should you file for bankruptcy? Bankruptcy stops collection calls, lawsuits and wage garnishments. It erases debt. And believe it or not, bankruptcy can help your credit score (in the long run). It can help you get back on track to a well-financed retirement by ending your need to keep on paying and paying and paying on insurmountable short-term debt. Finally, believe it or not, studies by the Federal Reserve Bank of New York have shown that people who file for bankruptcy do better than those who don’t(!).
Chapter 7 bankruptcy wipes out many kinds of debt, including:
- Credit card debt
- Medical bills
- Personal loans
- Civil judgments (except for fraud)
- Past-due rent
- Past-due utility bills
- Business debts
- Some older tax debts
Some debts, such as child support and tax debt, can’t be eliminated through bankruptcy. Student loan debt can be, but it’s very rare. But eliminating other debts can give you the financial wherewithal to repay those more stubborn debts.
How should you get the support you need? First, do NOT try to serve as your own lawyer. It may look tempting, since you are already short of cash, but this is nearly always a big mistake. Bankruptcy law is complex, with fixed deadlines and arcane, difficult-to-understand terminology. You have enough on your mind. Your very best initial decision is to locate an experienced, highly-recommended attorney.
The next most important thing is to USE your attorney, and to make yourself available to him or her. Your attorney knows the law; however, they do not know the specifics of your particular situation nor your goals. The only one that can provide that information is you. So: Engage with your attorney.
One way to do that is to ask questions – lots of questions. Invest some time on your own developing and writing down your list of questions. Don’t be afraid to ask questions. If your attorney seems not to welcome questions, you have the wrong attorney.
Also, keep up with your case, and READ everything that is sent to you. It may be tempting to “let the lawyer handle it”, but that is a mistake, because, again, they don’t know what is going on with you. Also, there are lots of fixed deadlines that must be met, but you won’t meet them if you don’t even know about them.
Finally, try to RELAX. This process doesn’t have to be as upsetting or intrusive as you might think. If you’ve hired an experienced attorney, he/she will take care of your case, and of you, to make the process as painless as possible.
Contact me today to schedule a free consultation. There is life after bankruptcy and it starts here!