It is important that you realize that if you are facing difficult times and you are considering filing bankruptcy—you must determine if filing is truly the best option for you to take.
Your analysis must start with analyzing your income and your expenses. Is your total debt higher than your total income?
Does your monthly income exceed your monthly debt—or is there a shortfall. For example, your monthly income is $4,000 but your monthly expenses total $4,500.
Are you currently juggling your credit cards to pay off debt or meet your other monthly living expenses?
Do you use high interest products (payday loans, title loans, pawn shop loans, borrow from others etc.) to pay your monthly bills or meet your living expenses?
Are you currently unable to pay your monthly bills on time?
Have you recently loss your job, had your hours or income reduced or have you recently faced a major financial crisis due to mounting medical expenses, foreclosure or notice of default on your home or auto loan—or any other major crisis?
In spite of facing the above—do you have a future windfall (additional income such as retirement, social security, insurance proceeds, legal settlement—or anything else) that you are expecting that could possibly turn your situation around?
If not, your credit may already be damaged—and bankruptcy should be considered as a real option—if you do not see a way to pay your debt off in the next five years or so!
Keep in mind that even if you turn over the keys to your house to the lender (friendly foreclosure) they can still come after you for the deficiency (shortfall) unless you settle with the lender and include in the foreclosure “no recourse for the deficiency” and they agree to it.
Keep in mind that it must be done appropriately to withhold legal scrutiny!
By discharging your home loan through bankruptcy the lender would not be able to come after you for the deficiency (shortfall).
Always keep in mind the fact that you may not be able to discharge child support orders, student loans or income taxes that you may owe, however you may be able to renegotiate them to more favorable terms.
Also keep in mind that damaged credit—and/or filing bankruptcy may make your job seeking efforts more difficult, therefore if you are looking for a job or considering a job change—be sure to maintain adequate credit if you can.
However, for those who are beyond that point and find meeting their monthly expense obligations difficult at this time—be sure to consider bankruptcy as a possible solution.
Keep in mind however, that it may not be the only solution, nor may it be the best solution for your particular situation.
You must look at your situation from all angles, therefore be sure to get several opinions (nacba.com) from competent professionals—prior to actually filing bankruptcy.
Also keep in mind that you will have to make a “sincere effort” to learn wise money management habits after you file bankruptcy so that you don’t find yourself in a similar position in the future.
This website and other education will put you on solid footing where you can build a foundation that is strong and will better serve your and your family’s future concerns.
If you have high credit card debt that you have fallen behind on paying, you have fallen behind on paying your home mortgage loan or auto loan and those amounts exceed your monthly income and you are having difficulty meeting your monthly living expenses—you may be one who could really benefit from bankruptcy!
Many have fallen into hard times by poorly managing their finances and you now have an opportunity to avoid that pitfall in your future—or start on a path to improving your situation if you make the choice to do so at this time.
Other Key Points to Consider:
If you buy term life insurance and have a plan to invest the difference so that you can attain a large nest egg you must have the mental strength—along with the other needed qualities to do so consistently and at the right level.
If you invest “outside” of your retirement accounts—you must be able to do so in a wise manner and in a manner that serves your and your family’s best interest—in good and bad times.
If you receive w-2 income or any other type of income you must know how taxes will affect the income that you receive.
If you utilize credit—you must be able to do so in a wise manner and in a manner that serves your and your family’s best interest.
You must understand why an emergency fund is so important and you must properly establish an emergency fund to avoid financial difficulty in your future—if you really want to achieve at a high level in your future!
You must properly fund your or your children’s education in a timely manner if you anticipate future educational expenses—in your or your family’s future.
You must also properly plan for your transition by doing the needed planning by getting a will—and doing what needs to be done in all areas of your finances—prior to your transition.
If you invest “inside” of your retirement accounts—you must be able to do so in a wise manner and in a manner that serves your and your family’s best interest—in good and bad times.
Final Thoughts on Bankruptcy
Filing bankruptcy is not only a major decision—it is often a difficult one and one that you must approach with caution.
You must consider bankruptcy in a timely manner so that it can be used by you and your family—more effectively.
You cannot do like many who wait too late to file and often deplete their retirement and other accounts (retirement accounts such as 401k’s, 403b’s, IRA's etcetera—are protected from creditors) prior to filing—and put themselves in an even deeper financial hole.
We have seen many take what they thought to be decisive action—and the right action as it relates to their finances—and in the end still end up filing bankruptcy.
It is important that you not make the same mistake!
It is imperative that you get competent professional advice upfront—and don’t be afraid to get several opinions as the decision that you make will affect you—and your family for years.
Of course the best advice is to get the right advice from the first professional you choose—however in the current corrupt and litigious marketplace that we now live in—advice on multiple fronts is usually the best approach!
We are hopeful that this discussion has given you meaningful direction and you will use this discussion as a launching pad to start on a path of managing your credit and finances in a highly efficient and effective manner!