No one wants to file bankruptcy. Often circumstances are beyond your control: divorce, death of a spouse, loss of job, serious health issues and resulting mountain of medical debt. Bankruptcy may be a solution you should consider if you are unable to pay your bills. Determining whether to file bankruptcy is a tough, complex decision. Sometimes bankruptcy is the right move for you and your family, and sometimes it is not. We assist people who are having financial problems make an educated choice.
To make the decision, we help people create a realistic budget of monthly living expenses without paying any debt except for cars and housing. Once the household living expenses and income after taxes are analyzed, you can see is what is available to pay debts. As a general rule, if a person is unable to pay all the existing debt within three years through payments, consumer credit counseling or debt settlements with creditors, bankruptcy may be the only real option. Bankruptcy may also be the best option to resolve past due mortgages or car loans.
An intangible, but important factor, is whether the financial stress and creditor calls interfere with your family and your ability to function at work or even to sleep. By the time clients visit our office, most have struggled for years and the financial stress has impaired their lives.
You should consult a bankruptcy attorney before cashing out or borrowing against 401(k)s or IRAs. Retirement accounts are usually protected from creditors and people are able to keep them in a bankruptcy. Plus, it is difficult to replenish accounts that took years to accumulate. In addition, you might create an unnecessary tax debt.
No magic formula will tell you whether bankruptcy is the best choice for you and your family. An experienced bankruptcy attorney is a great resource. Our initial bankruptcy consultations are complementary.