Quite often I reassure clients that come to our office to meet with an attorney regarding financial issues:
“I have NEVER had anyone sit down in my office and say, ‘Wow! I am so glad to finally be here because about five years ago I woke up one morning and thought-wouldn’t it be great to be filing for bankruptcy in a few years!'”
Certainly that may sound somewhat sarcastic, however, hopefully the humor in that impractical notion can ease the tension and help someone realize that most people would never consider a bankruptcy filing a “good financial plan” for their future. Even so, many things happen in our lives that land us in circumstances that we don’t ever want to be in.
When you come into our office, you will meet with an attorney that has been practicing law, specializing in the area of consumer bankruptcy cases, for a number of years. Even though you may feel very alone, we have likely helped someone in a similar situation as yours during the course of our practice. Most find that taking the step of discussing their financial issues with an attorney that can help them develop a plan of action relieves a great deal of stress and anxiety-especially when we advise of the various options available for their consideration. We will discuss key components in developing a strategy for consideration-the most important one being:
What gets you the most relief!
We will discuss the difference between continuing to work with creditors to pay back the debt, filing chapter 13 and offering to pay something back to the creditors over a period of time, or filing a chapter 7 and obtaining a fresh start. Of primary consideration for most people is keeping homes, cars, personal property….and SANITY! I generally tell people:
If you can make your mortgage payments and car payments on time each month with no problems but you otherwise have a lot of credit card or medical debt that you would be paying on for years because of the interest rate, it truly may be best to file a chapter 7. Pay your mortgage and car payments each month and move forward with your life. Get a fresh start meanwhile rebuilding your credit by continuing to make payments on those secured debts.
However, if you are behind on mortgage payments (or find it difficult to make your mortgage payment on time each month) and/or you are behind on car payments or struggle to make the car payment each month, a chapter 13 may be your best course of action. We can formulate a plan wherein we can reduce your overall monthly “outlay of money” and “lasso” all of your bills (except for future mortgage payments) into one monthly payment or break it down even more to your pay schedule (weekly, biweekly, semi-monthly). For many people, this allows you some breathing room-some relief. Additionally, it affords many others a manageable plan of action because they can now have the assurance that each month they will be able to make mortgage payments and pay utilities and insurance because all of the other debt is being paid through the chapter 13 plan.
Lastly, the most common area we discuss is a debt consolidation program. Generally these type programs might work well for someone with significant assets and the ability to pay their credit card debt, however they need help reorganizing. But the biggest concern on my part is that there are no guarantees that the creditors will accept any resolution offered by the debt consolidation program. Further, there is no court protection for someone that is trying to pay their debts through the program. The creditor can begin collection efforts at any point in time and that may include filing lawsuits and garnishing wages or bank accounts. While these programs sometimes offer temporary peace of mind, unfortunately, that peace may not be permanent.
The bottom line is that we are here to help you find answers. If you are bogged down and really cannot seem to settle on the right answer, schedule a time to meet with one of our attorneys. We will take the time needed to discuss all of your options fully so that you can do whatever gets you the most relief from your financial stress and worries.