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Bankruptcy might be your best option if…

Cathy Moran writes that there are “three situations when filing bankruptcy is justified.” (Read the full text of the article written by Cathy Moran here:  https://www.bankruptcysoapbox.com/not-last-resort/).

“1.  You Have a Crisis”

If you are facing a financial crisis, bankruptcy might be your best option.  A financial crisis can come in various forms:  the filing of a lawsuit against you, threats to repossess your car or foreclose on your home, never-ending phone calls and letters from debt collectors, garnishment of your wages or tax refund.

A financial crisis is often the straw that broke the camel’s back: It is a sign that your current situation is not sustainable; that something has to change.

Bankruptcy can stop the financial crisis in its tracks: When you file bankruptcy, there is an immediate automatic stay that stops all collection actions against you, with a few limited exceptions.  For example, when you file bankruptcy:

(1) Most collection actions, including most lawsuits and most wage garnishments, MUST STOP.

(2) If your home, or other real property, has not yet been foreclosed on, the foreclosure process MUST STOP.

(3) Attempts to repossess your car or other property MUST STOP.

Bankruptcy allows you breathing room and can be your best chance to weather the financial crisis without losing everything you have worked so hard for.

“2.  You See the Big Picture”

If you look at your finances and realize that you might never be able to pay back what you owe, bankruptcy might be your best option.

As Cathy Moran says so eloquently:  “A lifetime of minimum payments on suffocating debt is no life.  Keep making minimum payments and the debt doesn’t even die of old age, because payments extend the statute of limitations.  Healthy finances include a reserve for emergencies and serious savings for your old age.  Keep feeding VISA and AMEX and you’ll be eating cat food at 70.”

If all of your money every month is going to make minimum payments on your debt, you are in an unsustainable financial situation.  Bankruptcy allows you to discharge most unsecured debts and can free up your income so you can start planning and preparing for the future.  Don’t give up your future to pay past debts.

“3.  You Are Worrying Yourself Sick”

Bankruptcy may be your best option if financial stress is interfering with the rest of your life.  Cathy Moran sums it up perfectly:

“How we feel about owing money has a huge impact on physical and mental health.

It’s unfortunate in a way that our societal tendency to lionize those who doggedly pay off their debts:  the heroic story of slaying debts blinds us to the fact that stress kills.

And stress makes us stupid:  actually, measurably less likely to make good decisions going forward.  Collection pressures force too many folks to make foolish choices about which creditor to pay.

So, when money worries interfere with sleep, digestion, work or relationships, it’s worth considering whether a bankruptcy discharge would improve the situation.

Even elders and the disabled, who are often legally protected from collection by non bankruptcy laws, decide to discharge debts so the bills are gone legally, for all time. And they enjoy peace at home.”

Bankruptcy Might Be Your Best Option If…

Bankruptcy might be your best option if:

(1) You have a crisis;

(2) You see the big picture; or

(3) You are worrying yourself sick.

Bankruptcy is a major life decision and a lot of work:

It is not right for everyone, but  “[t]he sooner you look at the big picture provided by bankruptcy, the less likely you are to waste money trying to pay impossible debts or make catastrophic decisions like invading retirement or borrowing against your house to pay dischargeable debts.”  (Read the full text of the article written by Cathy Moran here:  https://www.bankruptcysoapbox.com/not-last-resort/).