A LOT of people in debt often already know what they need to do once they realize that bankruptcy is their only way out. But they usually delay the decision to file because they try their best to avoid it if at all possible, and they will only rush to act when they face an immediate threat from creditors such as a lawsuit or wage garnishment. However, sometimes the decision to delay can hurt you. Let me explain.
If you wait too long and continue to use all your financial resources to temporarily keep you afloat, in the end you might be sorry that you did this. For example, I have seen a lot of people go through all their savings, retirement plans, kid’s college funds, etc. in the hopes that doing this will fix their financial situation. They often find out the hard way that it is not and ultimately end up filing bankruptcy anyway.
Of course, no one has a crystal ball that can predict the future but unless you miraculously come up with the money you need when you’re already drowning in debt, chances are that things will just continue to get worse and this can put you at an extreme disadvantage, making financial recovery more difficult than it should be.
When you are depleting assets while facing debt collections lawsuits, it may be difficult to cover even basic living expenses such as rent or mortgage, food, utilities, car payments, etc. Sure, you may be avoiding bankruptcy temporarily, but all you’re doing is putting a band-aid on a big, gaping wound. This is especially true if your wages are being garnished and you have other creditors who are just waiting to do the same. If you completely use up all your assets so that you have zero at the time of filing bankruptcy, you may find it more difficult to regain your financial footing and start your new life after bankruptcy. Most retirement plans are also exempt in bankruptcy and had you not used all your retirement money to pay debts before filing, you would have been able to protect what little you have and still have some type of savings after bankruptcy.
I have clients whose debt payments are more than 30-40% of their monthly income and they wonder why they’re broke every payday. Keep in mind that if you are in that situation, you are only living on 60-70% of your actual income level and that is why you feel that there is never enough money to go around no matter how hard you work. What this means is that you are on “survival mode” and as long as you stay there, you’re never going to be able to plan for your financial future. And remember that if you “fail to plan, you plan to fail”. I am sure this is not what you want for yourself and your family, is it?
If bankruptcy is your best solution, please don’t be too hard on yourself by looking at your filing as a sign of personal failure. Bankruptcy is not the end of your financial life. But rather, it can be a useful tool to be able to rebuild your finances, your credit and your life if you are no longer able to solve your debt problems on your own.
If you are in debt and don’t know what to do, let me help you understand your options. I will give you a free initial consultation so we can talk about your situation.
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NOTE: Due to COVID-19 pandemic, I am offering free consultations BY PHONE to anyone who needs help in dealing with their debt problems.
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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 5,000 clients in getting out of debt. For a free attorney evaluation of your situation, please call RJB Law Offices at TOLL FREE 1-866-477-7772.