Is Bankruptcy The Right Choice For You?

Are you struggling with the choice to file bankruptcy?

However you got into debt, you may be struggling with the question, “Is bankruptcy right for me?”

Most of the clients I meet in my Asheville bankruptcy law firm came to the realization that they were trapped with the amount of debt they had and needed help getting relief. They couldn’t get out of debt by skipping the morning coffee line.  They couldn’t get out of debt from debt snowballsDebt avalanches didn’t work either. You name it, they tried it. But nearly all of my clients say the same thing, “I wish I would have filed bankruptcy sooner.”

Life Happens

Job change, illness, divorce… or simply, “life happens”. Whatever the reason that caused your financial distress, if you are going without basic necessities, an emergency fund, or health insurance, then it is time to consider filing bankruptcy. Filing for bankruptcy relief can have an immediate positive impact on your quality of life. Creditors stop calling, lawsuits stop, foreclosures and repossessions are halted. You can focus on taking care of yourself and your family instead of taking care of your creditors. Often when clients come to me, they have sacrificed the basic necessities so that they can pay their creditors. But after bankruptcy, they have money for healthy food, car repairs, and clothes that aren’t from a thrift store.

Bankruptcy Helps You, Not Punishes You

And guess what?  Bankruptcy is really not that horrible. Talk to someone that has actually filed bankruptcy instead of listening to the scare tactics. You will probably keep everything you own. It’s also not uncommon to see credit scores rise dramatically after bankruptcy with just a little bit of time.  You can still borrow money, including for a car or a home.  After your bankruptcy, you will have wiped out nearly all of your debts.  Since you won’t be eligible for a a discharge in another bankruptcy right away, your are a better credit risk coming out of bankruptcy than before you went in.

The Sooner You File, The Sooner You Recover

The longer you wait to file bankruptcy, typically the worse off you will be.  You might drain your retirement that you would otherwise keep in bankruptcy.  You might waste years in a debt settlement program.  This will only leave you worse off once you finally file bankruptcy.  File bankruptcy first and you will recover sooner with more of your assets left over.  Find out if it is the right choice for you by calling a bankruptcy attorney in Asheville, NC at 828-412-8700.

Are You Thinking About Filing Bankruptcy? Don’t Try These Three Things First.

When a client comes to me seeking help to file bankruptcy, many times they have tried something else first.  Whatever they tried didn’t work.  It was also time, money, and headache that could have been avoided.  Sometimes there are strategic reasons to wait to file bankruptcy.  But usually, the sooner you file bankruptcy, the sooner you eliminate your debts and begin making a financial recovery.

If you are considering doing one of these three things to try and get out of debt, call me first.  It may do more harm than good:

  1. Don’t try to make a debt settlement program work.

Bankruptcy is cheaper, takes less time, and stops lawsuits from your creditors.  If you sign up for a debt settlement program, your creditors aren’t getting paid and after a while they are likely to sue you.  This is usually about the time many of my clients decided debt settlement was not worth it.

  1. Don’t borrow money from friends and family.

You’ll feel morally obligated to repay them, and if you do, the court might view the repayment as fraudulent and your friends or family may have to give the payments back.  Do this and you may have to wait before you can file bankruptcy.

  1. Don’t use your 401(k) to pay down debt.

You’ll need the money for retirement and you’ll get to keep all of it when you file bankruptcy.  Use it to fend off your creditors before filing bankruptcy and you won’t get that money back.  It may also trigger tax consequences, and if you can’t afford the tax bill when it comes due, you may not be able to discharge the debt in a Chapter 7 bankruptcy.  If you file a Chapter 13 bankruptcy instead, it may increase the amount of your monthly plan payments.

Talk to me first.

Don’t try figuring it out on your own.  I will tell you if bankruptcy is the best option or if there is another solution that would work better.  These solutions might make sense if bankruptcy isn’t a workable solution.  Usually, it just delays the inevitable.  The longer you take until you file bankruptcy, the longer it will take to get a fresh start.

You Don’t Lose Your Retirement Accounts in Bankruptcy

You made responsible choices and contributed to a retirement account, and now that nest egg has grown significantly.  Don’t worry about losing your retirement savings in bankruptcy, because it’s exempt.  Under North Carolina exemptions, all IRS qualified retirement accounts (employer pensions, 401(k)’s, Traditional IRA’s, Roth IRA, etc.) can’t be touched by the bankruptcy court.

If you are a state or municipal employee, those retirement benefits are exempt too.  This also applies to retirement accounts from the federal government, as well as other states and their municipalities.

If you haven’t filed bankruptcy yet, but are considering withdrawing from your retirement benefits to pay down debt, please call me first.  Many times this just delays the time before you end up filing bankruptcy, except now you’ve spent your retirement funds.  Funds you would have kept had you filed bankruptcy first.

Every dollar that you spend from an exempt source is a dollar that you could have otherwise kept after filing bankruptcy. The sooner you file bankruptcy, the sooner you will stop making payments on old debts that are keeping you from getting a fresh start.