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Don’t Wait Until You’re Too Broke To File For Bankruptcy

If you’re in debt, it’s a good idea to try every solution to end your financial problems. Just don’t take too long.

Lots of us in the world of bankruptcy and debt relief tend to talk in the language of addiction when describing our clients.

Debt problems spiral out of control, making it impossible to stop using credit cards.

Using credit cards makes you feel good at first, but the buzz fades.

You’ve got to hit rock bottom before you can get out of debt.

Rock bottom, however, is a deceptive term because it implies that there’s nothing left. But as you’ll see, waiting that long to make a decision that may include bankruptcy isn’t your best bet.

Filing For Bankruptcy Takes Time

In order to get a bankruptcy case into the court system, you’re going to need to spend time getting together your financial documents.

You’ll also need to spend a fair amount of time working through the bankruptcy schedules and related documents, ensuring that the information is correct and accurate.

When I say it takes time, I’m not talking about 20 minutes on a lazy Sunday afternoon. In fact, most people spend upwards of 10-15 hours working with a bankruptcy lawyer before the case is filed.

For those going into the process without a lawyer, it’s even more time-consuming because there’s a steep learning curve when it comes to working through the forms and procedures.

If you’re broke, you’re likely chasing every dollar. You’re hustling just to make ends meet. Definitely not a good time to take a few hours to work on your bankruptcy case.

Filing For Bankruptcy Costs Money

There’s a filing fee to get your bankruptcy case filed, though some people may qualify to get their fees forgiven by the court.

Even if you’re going to file for bankruptcy without a lawyer, you probably want to spend some money ensuring that you’re qualified for the type of bankruptcy you’re seeking.  No sense in wasting your time and energy, only to get your case thrown out.

If you decide to use a lawyer, there are fees involved as well.

If you’re at the end of your financial rope, you may not be able to pay for the help you need.

When You’re Broke, You’ve Got Fewer Options

Bankruptcy isn’t the solution to every financial problem.

If you’ve got an asset you can’t protect in bankruptcy, or a financial wrinkle that can’t be smoothed over with the help of the court system, then you’ve got to look for other options.

Those options involve spending money. Debt settlement, credit counseling, and other negotiation tactics call for you to spend something in order to make the creditors go away.

Without any money, you may no longer have a means to negotiate.

Planning Ahead Is The Wisest Choice

I’m not telling you to jump into the waiting arms of the bankruptcy court, but I do think it’s important to scope out your options at the beginning.

Get a feel for the pros and cons, as well as the costs, of all your debt relief options.

If you don’t, you may find that your best solution is out of reach.

By |January 29th, 2014|

About the Author:

I've been a consumer protection lawyer since 1995, working to help people end their bill problems. I'm a faculty member at the Student Loan Law Workshop, a nationally recognized speaker, and a long-time member of both the National Association of Consumer Bankruptcy Attorneys and National Association of Consumer Advocates.
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