Bankruptcy by a Thousand Bills

“I can’t believe it has come to this.”  Often when I meet with people in the initial bankruptcy consultation they tell me that they are frustrated, embarrassed, and really in a state of disbelief that their debt situation has reached this point.  If you have never had debt problems you may find it hard to believe that someone “doesn’t know” how they got to the point of  needing to file for bankruptcy.  But if you have dealt with an unexpected job loss, reduction in income, sky high medical bills, or any other financial disaster, you probably have a little more understanding.

Often the road to bankruptcy is a gradual one.  There is a loss in income or an increase in expenses (i.e. medical bills, kid’s college, etc.), and the family compensates for this change by using the credit card to buy a tank of gas here and there, or maybe the monthly groceries, or a plane ticket to see family.  This, of course, results in a higher minimum monthly payment on the credit cards making money even more tight.  So a second credit card is obtained and the cycle goes on and on until you wake up one day and there is no money to make the monthly minimum.  Payments are missed, collection calls increase, and maybe even a lawsuit is filed.  The process is gradual and usually doesn’t cause too much stress until a big event like a lawsuit or a wage garnishment occurs – and then people panic.

Stop the Cycle – Regain Control

Bankruptcy is powerful w hen it comes to dealing with the crisis of garnishment or a debt collection lawsuit.  But bankruptcy can also help you to regain control of your finances and truly start over.  The positive side of starting over is that you will have no debt and won’t have to worry about collection calls, lawsuits, or wage garnishments.  The downside to starting over is you are also starting over when it comes to being able to purchase things on credit for the next few years.  That is where you must weigh the pros and cons of bankruptcy.  You must also take a hard look at your current debt situation and whether there is any realistic chance that you will pay that debt off in your lifetime.  Sometimes that is the biggest benefit a bankruptcy lawyer can provide – an objective assessment of your debt and the likelihood that you will ever become debt free.

Nobody wants to file for bankruptcy.  But sometimes, you need to take a hard look at your current financial situation and make equally hard decisions.  Bankruptcy is not painless.  It will require work on your part to recover.  But it can help you get back on track.