Thinking of Bankruptcy? 5 Things You Must Consider

by John Skiba
Contact

When I first meet with my bankruptcy clients almost all of them tell me that they have been thinking of filing bankruptcy for a very long time but have struggled to finally make the decision to pull the trigger. It is understandable. No one wants to file bankruptcy.  But sometimes, it is necessary and can really jump start your financial recovery.  If you are in the stage of thinking about filing bankruptcy here are five things to consider before you make the jump.

#1 – Bankruptcy is Not Painful

After my clients have gone through the bankruptcy process many express to me how smooth the process was.  Part of that is my approach to bankruptcy.  If we take the time to get all of the necessary information and prepare the bankruptcy petition with a lot of attention paid to the details, the actual filing and process can be very smooth.  Another reason is that the bankruptcy court is very streamlined.  Millions of Americans have filed for bankruptcy and the court is designed to handle a large volume of cases.

#2- Bankruptcy is not Painless

While the process is generally smooth the process may not be entirely painless.  If you think about it, the power of bankruptcy is truly incredible.  I have had clients with over $100,000 in credit card debt that are able to eliminate it completely and start over.  Without bankruptcy those debts would literally haunt them for the rest of the lives.

In exchange the bankruptcy court requires a few things.  First, that you be completely honest with the information they request from you.  Failing to disclose required information can lead to a very painful bankruptcy experience.  Next, if you have assets that are not protected under your state exemption laws you may lose them.  For instance here in Arizona often those filing bankruptcy will lose a portion of their tax refund.  The money will be taken and given to your creditors.

It sucks to lose that money, but in the grand scheme of things if I told you that you could eliminate all of your debt if you gave up your tax refund, would you?  Of course you would.

Finally, you are expected to play by the rules.  If the bankruptcy court or the bankruptcy trustee need documents, you need to comply.  If a court date is set, you are likely going to need to be there.  I understand that the life is busy and this just adds another layer, but if you want the prize, you have to play by the rules.

#3 – You Will Recover More Quickly Than You Think

Bankruptcy stays on your credit report for ten (10) years.  A full decade.  However, bankruptcy does not mean ten years of no credit.  In fact, many of my clients are shocked that they are getting car loan offers and credit offers in the mail while their bankruptcy is still pending!

While I don’t sugar coat that bankruptcy is a serious negative mark on your credit report, most people recover much more quickly than they initially think.  For instance, FHA will provide a home loan two years after the chapter 7 bankruptcy is discharged (completed).  Many other private lenders will loan you money on a house in three to four years after your bankruptcy is finalized.  If you can buy a house, you can likely get credit for most things.

#4 – Use a Bankruptcy Lawyer

This one is self-serving.  But even if you don’t use me, hire a bankruptcy lawyer to help you though the process.  Notice I said a bankruptcy lawyer.  Don’t hire just any attorney or your neighbor who happens to be a lawyer.  Find someone who practices bankruptcy law day in and day out.  A good resource to finding bankruptcy lawyers in your area is through the National Association of Consumer Bankruptcy Lawyers (NACBA).

Even if you think your case is pretty straight forward, hire a lawyer.  Bankruptcy laws are full of all types of legal landmines that can prove disastrous for the unaware.  By trying to save a few bucks you may end up costing yourself big time.

#5 – Don’t Delay

The biggest mistake I see with most people who file bankruptcy is that they waited too long to start the process.  Again, it is understandable.  But you need to really evaluate your finances and try and  make an objective determination if can realistically repay your debts.

A good way to determine this is to meet with a bankruptcy attorney.  Most lawyers offer a free consultation and a good bankruptcy lawyer will never steer someone into a bankruptcy case that shouldn’t be there.

Before you drain that retirement account to pay off credit card debt, consult with a professional who can give you sound advice.  You don’t want to be in a situation where you have blown through your 401(k) trying to avoid bankruptcy and end up having to file anyway.

What are some of the concerns you have about filing or bankruptcy?

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© John Skiba, Arizona Consumer Law Group, PLC | Attorney Advertising

Written by:

John Skiba
Contact
more
less

Arizona Consumer Law Group, PLC on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!