I’m not stupid enough not to realize that many people have a poor impression of lawyers. I watch TV. I’ve seen those commercials, and I can’t blame them. There are plenty of bankruptcy lawyers out there who seem to suggest that bankruptcy is an easy choice and will take care of all your problems. No one thinks they’ll ever have to file bankruptcy. Bankruptcy is the worst-case scenario no one ever thought they’d see themselves in. I understand that and try to see if there is anyway that someone can avoid having to use it. Bankruptcy should never be considered an easy choice. There’s still a great deal of social stigma against it and your credit report will reflect your bankruptcy for ten years. In some states, employers can even refuse to hire you because you filed.
During my initial consultation with someone who is thinking about bankruptcy, my main objective is to find a reason for them not to file bankruptcy. Which means they won’t be hiring me.
Bankruptcy might not be your best option in a few different situations:
- If you’re unemployed. Although having a debt collector hound you and file suit can be stressful, if you’re unemployed – whether or not you’re receiving unemployment benefits – the collector won’t be able to do anything once it gets judgment. It can’t garnish your paycheck. If there’s nothing in your bank account, it can’t garnish that. Keep in mind, though, that if you own a home, it can record its judgment, which means that you’ll have to pay that creditor when it comes time to selling or refinancing your home.
- If your debts are low. I understand that debt, no matter how much sometimes, can feel overwhelming, but if buckling down and cutting down on non-essential items like travel or recreation for a year or two or buying a less expensive car means that you can pay off your debt, I encourage you to think seriously about doing just that. As a rule of thumb, if your credit card and other unsecured debt is more than 40% of your before taxes annual income, then bankruptcy might be a good option. Unless you interest rate is extremely low, you’ll be paying that debt off for a very long time.
- If you’re retired or disabled. If you’re receiving social security benefits, this money is protected from creditors. Again, even though they’ll be able to get judgment, there won’t be much they can do after that beyond hounding you for the money. Bankruptcy might give you peace of mind and make the phone calls stop, but that doesn’t mean you have to file right away.
If you’re having trouble making ends meet and think that bankruptcy might be a good idea, schedule a free consultation with a bankruptcy attorney. Your consultation is confidential and there’s no obligation to hire us. By the end of the consultation, you should know whether or not bankruptcy is a good idea and whether or not you want to work with us.