If you’ve been struggling with debt for years, you have likely received advice (much of which may have been unsolicited) from friends, family members, professed experts, and the internet, telling you to sell your possessions and cut back on specialty coffee drinks. You might have also heard certain myths about bankruptcy, such as the idea that you should only consider it as a last resort.
This is only partially true. When it comes to improving your financial situation and reducing debt, you do have several options at your disposal, and you should generally consider these options before you file bankruptcy.
But bankruptcy is not something to avoid at all costs or to only use if you have exhausted all other strategies. Bankruptcy is a centuries’ old legal process that helps hundreds of thousands of Americans per year. With the right support, bankruptcy can be the fresh start you need, allowing you to eliminate debt you cannot pay off while maintaining a minimal standard of living for yourself and your dependents.
Many people who advise against bankruptcy do so assuming that you are in your financial situation by choice. Bankruptcy, they say, will not change the spending habits that led to your overwhelming debt.
But countless debtors are facing financial hardship through no fault of their own—especially today, with the economic impact of the coronavirus. And this is exactly why governments throughout history have written bankruptcy into their laws. Unmanageable debt can happen to anyone, no matter how diligent or hardworking they may be.
Why Waiting to File Bankruptcy Might Make Matters Worse
If you owe more than you make, and your debt is preventing you from maintaining an emergency fund, building your retirement savings, or paying for anything other than the bare necessities, now may be the best time to file.
Some may advise you to wait as long as possible, but delaying bankruptcy may trigger the following consequences:
- Creditor harassment
- A lawsuit (and, as a result, wage garnishment or a bank levy)
- Severe damage to your credit score
You may lose some of your most important assets and even your ability to secure employment. The longer you wait to address your debt, the more consequences you may experience.
The Benefits of Bankruptcy
If bankruptcy is right for you, you can experience several powerful benefits. Primarily, the court may discharge some or all of your debt, meaning it will eliminate your liability for what you owe.
Bankruptcy can also:
- Temporarily and/or permanently end collection attempts from creditors
- Delay or prevent repossession or foreclosure
- Save your business from financial ruin
- Give you a 3-5-year period to repay a portion of your debt using your disposable income
- Provide the opportunity to rebuild your credit over time
- Allow you to protect certain assets from liquidation
To maximize these benefits and minimize your losses, you’ll want to get in touch with a qualified attorney before you begin your filing process.
Why You’ll Need Professional Support
While you shouldn’t necessarily avoid bankruptcy, you should refrain from filing it by yourself. An experienced legal team can assess your situation to determine the best possible course of action. At The Buchalter Law Group, we have more than 45 years of experience providing debt-relief solutions for our clients. You can trust us to recommend bankruptcy only if we feel it is right for your situation. If appropriate, we will suggest alternatives that can accomplish your financial goals.