FOR people who are considering bankruptcy as a way to get out of debt, some questions constantly arise. Am I doing the right thing? What other options are available? If I decide to file bankruptcy, should I file now or do it later?
Filing for bankruptcy is a serious decision to make. Unfortunately, a lot of people are hopelessly trapped in debt that it is their only chance of starting over. Most of them already have late payments, collections, judgments, etc. on their credit report. Some are in danger of getting their wages garnished, their bank accounts levied or their property and assets being taken. If you are in any of the above situations, filing bankruptcy may actually help you more than it can hurt you. It may be just what you need to turn your situation around and change your life for the better.
In certain cases, there may be alternatives to filing bankruptcy:
1. Settle with creditors- In some cases, depending on the nature of the debt and the amount owed, it may be possible to settle directly with creditors, often for less than full amount especially if you are offering a lump sum settlement. For example, my office regularly settles debts for 40-60 percent of the amount owed. Where the debtor doesn’t have the cash to settle, an installment plan may be arranged. Late penalty payments and interest may be waived. Bill collectors are aware that as time goes by, the ability to collect from the debtor diminishes. Often, the creditor will choose to take something now rather than wait forever to collect.
2. Review your monthly income and expenses- If you are living beyond your means, perhaps you can sit down and take a good look at exactly where your money is going every month and simply cut out unnecessary expenses. Review detailed information of your monthly income and monthly expenses to better understand your resources. I find that a lot of people don’t even know exactly how much they owe and how much they are paying to their creditors every month. This is unbelievable. If you need to cut expenses to the bone until you pay off your debts, then do it. Some people are so lazy to even look at their monthly budget that they often overlook expenses that can easily be eliminated without much sacrifice.
3. Do nothing (Well, at least for now) - I normally don’t recommend this option because if you do nothing, oftentimes your debt problems will only get worse over time. Sooner or later, you will need to face the music and deal with your creditors, so why not do it now? You can’t shun off from them forever. In some cases, however, where you have no income and no assets and you don’t expect this situation to change anytime soon, you may be considered "judgment proof". What that means is that even if your creditors sue you and get a judgment, the judgment is worthless because it is uncollectible. Be aware, however, that if your financial condition does improve in the future, then you may no longer be judgment-proof. More importantly, if bankruptcy is in fact your only way out, you are better off filing now while you still qualify. If you wait to file until later when your financial situation has improved, you may no longer qualify at that time and thus, you would have missed your only chance to get out of debt once and for all.
If you are considering bankruptcy as a way out of debt, I am sure a lot of questions are going through your mind at this time. For a free evaluation of your case, please call our office at Toll-Free 1-866-477-7772 to schedule a free consultation. Let us help you. We have offices in Glendale, Cerritos and West Covina.
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None of the information herein is intended to give legal advice for any specific situation. Atty. Ray Bulaon has successfully helped over 4,000 clients in getting out of debt. For a free attorney evaluation of your situation, please call Ray Bulaon Law Offices at TOLL FREE 1-866-477-7772.
( Published October 7, 2009 in Asian Journal Los Angeles p. B5 )
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