Cashing out your retirement account to pay debts spends your retirement account. Then you have sacrificed yourself, your spouse, and your children. People often come to our office after their home has been sold. The emotions of being harrassed for debt often cause this deer in the condition of the headlights where feelings of danger cause paralysis.
Any option you take needs to keep as much property as possible and discharge the maximum amount of debt. Four different federal reserve bank studies have shown bankruptcy increases your net worth. Bankruptcy is not your only option but one of your best options.
Expect your finances to improve and your available cash to increase when you file. Using the law, you can decrease the finance charges, and overall, bankruptcy is the right choice and not your last option.
When is the Best Time to Review Your Options?
A person should see us at the start of any foreclosure or debt lawsuit. As a foreclosure or debt collection lawsuit goes on, you lose your best options. You are also required to answer a lawsuit within 20 days. Miss that deadline, and you lose by default.
What Happened if You Wait Until the Last Minute to File?
Once judgment is granted, the home can go to auction for sale. They start wage and bank garnishments if you have a job or bank account. These are public records that show on your credit report.
Often, if people file for bankruptcy as a last resort, they didn’t sue the creditor back or see an attorney earlier. This allows the bank’s attorney fees to pile up, increasing your debt.
How is Filing for Bankruptcy Done?
The court is open 24 hours a day for electronic filing. There are emergency filings, but often you repay a lot more and lose more by not seeing an attorney early. Our website is open 24 hours a day, just a browser away from getting all the forms together.
Our website home page lets you fill out the intake, take the class and gather the documents needed to file.
People often make emotional decisions. When you have financial trouble, you need logical choices. When you are in financial difficulty, often emotions of blame, fear, shame, and guilt make it hard to come in and discuss options to regain financial stability,
A financial crisis means it is time to find out your best options. Filing bankruptcy may not be your best option. Filing bankruptcy needs to be something that you should consider.
Filing Bankruptcy Compared to Other Options
There are non-dischargeable debts like recent income taxes and criminal fines if you file bankruptcy. If your file bankruptcy, your credit report often improves if your fico score is less than 650. If you don’t repay a bill, the creditor usually files 1099 that you owe income. The other financial options often cause a 1099 tax debt. Bankruptcy doesn’t.
If you feel the moral obligation to repay the debt, Chapter 13 bankruptcy allows you to repay it over time. Mortgages and taxes must be your first option.
Reasons Why Debt Settlement is Worse Than Bankruptcy
Your option to file bankruptcy is essential. You should save bankruptcy back for real emergencies. Chapter 13 bankruptcy cases pretty much operate the same way consolidation does.
The money you save, you keep. That money can pay car insurance and a car payment. The rent can be paid. Bankruptcy rules make it certain you can live on your budget. When you are filing for bankruptcy, unsecured debts are paid last.
Often the court will use the law to prevent any collection if your schedule J form shows no money to repay exists. In this economy, your form often shows you don’t have the money.
Three Reasons Debt settlement is Worse than Bankruptcy
- Chapter 13 bankruptcy cases have the power of a federal judge who can demand that they take from 0 to 100% as a payback. Payments are based on your net income. In debt settlement, you are reduced to begging them to take 70%. Some debts will take the offer. Some won’t.
- If you owe less than 10,000 dollars and can afford to pay back part bills over time, perhaps settlement is an option. However, settlement causes 1099 tax problems and also harms your credit.
Moreover, filing for bankruptcy does not cause a tax problem or harm most debtors’ credit. Sure, if you have an 800 score, it drops, but most people with a 550-625 fico increase their credit score.
- File a bankruptcy case, and bills are reported as an account closed, not as a delinquent obligation.
- Ok, let’s make these four reasons. Over 90%of all settlements managed by a company fail. Instead, use a bankruptcy law firm if the offer is to just a couple of creditors.
Debt Consolidation Loans Make This Option Your Last Resort
Debt consolidation loans require that you repay debts in full with interest. Somehow I like repaying as low as zero better. Your ability to borrow from creditors requires a low debt-to-income ratio. You have to pay interest if you resort to a debt consolidation loan. This can make repaying the debt less likely.
Consolidation also often involves a car lien or mortgage. This means you are risking assets to take out the loan. The best way to avoid bankruptcy is not to take out a debt consolidation loan.
Borrowing to pay off bills you cannot afford in a crisis does not make sense. Payment becomes more burdensome and your partners, like the wife and children, suffer more, not less.
Ignoring the Debt vs. Bankruptcy
Ignoring the debt often makes the matter worse. Creditor interest and attorney fees increase over time. Creditors have from 10 to 15 years to sue.
If you are uncollectible today, they sue you later when you have assets or garnishable wages. Kicking the can down the road and ignoring debts usually doesn’t work.
However, this option is probably better than cashing in retirement or mortgaging property to pay creditors. If you think you are too poor, think again. If you have no assets today and no income, you automatically qualify for a Chapter 7 bankruptcy case.
Later you may have assets, and you may have to file a Chapter 13 later. Or later, you may not be able to file for bankruptcy.
Contact Us If You Have a Pending Lawsuit or Paying is a Problem!
Our initial consultation is free. We can discuss the benefits of filing bankruptcy or suing creditors back. We discuss how a bankruptcy case can solve your situation and how you can get a fresh start.
Don’t just use any local attorney or hire someone based on advertising. Your circumstances are unique, and we listen. Your circumstances are not the same interests, goals, and desires as the next client who may have the ability to pay back debts.
Most bankruptcies can be filed within 2 hours. It helps you save property and forces them to accept what you can afford, which may be zero. Bankruptcy can mean the credit and money to buy a home is eventually possible.
Resources for Bankruptcy
Getting Started with Your Bankruptcy
Louisville, Kentucky Bankruptcy Forms
Getting Your Fresh Start Through Bankruptcy
Your Fresh Start on a New Budget with Bankruptcy
Nick Thompson – Kentucky Foreclosure & Bankruptcy Attorney
If you are considering bankruptcy, don’t delay because timing is crucial. I am here to help you. So, contact my office right away to start the conversation. Nick C. Thompson, Bankruptcy Lawyer: 502-625-0905.
