Filing for bankruptcy can be intimidating, especially for people who have always been financially secure. There are quite a few reasons why people put off filing for bankruptcy; denial, embarrassment or maybe they consider bankruptcy a final option. Waiting, however, can cause more stress and more financial strain on you and your family. While bankruptcy surely wasn’t your family’s first option, it’s best to know when to file.
Five important reasons to file early are:
1. It’s easier to save your home – Many people wait on bankruptcy because they don’t want to lose one of their most valuable assets-their home. Filing early, however, makes it easier to save your home. Being only six months behind on your mortgage is much better than one or even two years, and you won’t have as many payments in arrears to catch up on.
2. You can rebuild your credit sooner – While a bankruptcy will stay on your credit for seven to ten years, you can actually re-establish your good faith after only a couple of years. You may continue to pay a higher interest rate, but lenders will be much more willing to lend after a few years of re-established credit
3. Collection efforts won’t intensify – For most people, the most stressful part of being behind is the constant harassment from creditors. It may begin with phone calls and letters, but if you wait too long, your creditors can repossess secured items or sue you for unsecured debt. If they win you could lose your assets or be forced to pay through wage garnishments.
4. You can save your retirement – All too often, people decide to use their 401k or IRA to pay down their debts. While it may seem like a good idea at the time, if you can’t pay off all your debt and still file for bankruptcy then you are depleting your only exempt accounts. Retirement accounts are exempt during the bankruptcy process, so it’s important to use them only if they are sure to save you.
5. Chapter 7 may still be an option for you – Things change. If you are deep in debt and holding out on bankruptcy, then you may come across a pay raise or inheritance. Since you will need to qualify under a means test in order to file for Chapter 7, it’s best to file as soon as possible. You wouldn’t want your family inheritance or your hard-earned promotion to eliminate your chance of filing for Chapter 7 bankruptcy, and to ultimately end up paying off your creditors in a Chapter 13 bankruptcy.
You don’t have to do this alone. Consider your options early and consult a Brownsville bankruptcy attorney as soon as your debt becomes overwhelming.
About the Author: Jeff Davis is the Owner of the Davis law firm and a highly experienced Brownsville bankruptcy attorney. To find out more information about a Rio Grande Valley bankruptcy lawyer, please visit www.jeffdavislawfirm.com.