Bankruptcy is a powerful legal tool that helps people get out of debt, makeup missed mortgage or car payments (Chapter 13 only), and puts an end to collection phone calls, wage garnishment, and lawsuits for unpaid debts. Bankruptcy offers great benefits to many people; however, bankruptcy is not always the right tool to address debt problems.
When you are deep in debt and considering solutions, you should explore all of your debt relief options. If you have a viable and realistic option to handle your debt problem other than bankruptcy, then it is important to thoroughly explore that option. Keep in mind that a true debt relief solution addresses your entire debt problem, not just a portion of it.
Know that we are not in the business of talking people into bankruptcies they don’t need. We are in the business of helping people get out of debt and getting the fresh financial start they deserve. When you are deep in debt and considering solutions, you should explore all of your debt relief options. The best option for you and your family will depend on your specific situation.
The truth is bankruptcy is often the best debt relief option because the other options are simply not feasible or would take so many years to execute that they are economically damaging and would keep a person deep in debt for many years to come.
If you struggle in debt year after year, you will end up paying significantly more in interest and potentially in fines. If you cannot keep up with your payments, you are at risk of being sued and possibly having your wages garnished or bank account levied. Also, the years you struggle to pay off debt are years that you are not saving for retirement, an emergency fund, or furthering your financial wellbeing.
Bankruptcy is not the right solution for everyone, but if you are struggling with overwhelming debt then bankruptcy is a potential option you should explore.
When Bankruptcy Will Not Solve The Underlying Problem
If your current monthly expenses, even after erasing debts and/or surrendering secured property with high payments, exceed your income: If you are spending beyond your means bankruptcy can help you erase debts incurred prior to filing, but it will not solve your underlying problem of having expenses putting you in the negative each month.
When the underlying issue that led to debt problems is not yet solved: If you fell into debt due to job loss or a medical emergency, or another underlying issue, has that issue been resolved? If there is an underlying issue that led to debt problems that are not yet solved, then it may not yet be the best time for you to file for bankruptcy protection.
In situations where a person owns substantial and valuable property that does not have liens attached: Equity in property and other belongings that exceeds the exemption amount allowed by law (the amount of value in an item you get to protect and retain through bankruptcy) puts those belongings at risk of being seized and sold by the bankruptcy trustee. If you are struggling with a debt problem but also have significant unexempt assets, then it is important to explore debt solutions other than bankruptcy.
When a previous bankruptcy filing precludes discharge: If you received a discharge in a Chapter 7 case before, you must wait at least 8 years from the date the first case was filed, to be able to receive a second discharge of debts in another Chapter 7 case. In instances where a debtor received a Chapter 7 discharge in the last 8 years, filing another Chapter 7 will offer little to no benefit but filing a Chapter 13 may offer needed protections and benefits.
Bankruptcy is the wrong tool to use when none or few of the benefits of filing will be realized. When we help someone file for bankruptcy relief, we want them to enjoy all of the advantages bankruptcy law offers debtors. In some situations, bankruptcy is simply not an option, not the right option, or it is not yet the right time to file.
Consult with a Bankruptcy Attorney
The best way to know if bankruptcy is the right solution to your debt problem is to consult with a bankruptcy attorney. We offer free consultations to people in and around Savannah, GA.
We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code. Find out more about Bankruptcy in our guide: All About Bankruptcy.