People often wait too long before filing bankruptcy

On Behalf of | Oct 29, 2020 | Personal Bankruptcy |

People who have financial issues often regard bankruptcy as a last resort. It is something that is put off for months or years as they struggle to make payments. While this is admirable, it can be a mistake to wait.

Some assets are protected

Unfortunately, people will often use savings from retirement accounts, equity in their home or other assets to pay bills. However, Chapter 7 and Chapter 13 Bankruptcy allows the individual or family who files to hold onto many of their possessions. Examples in the state of Florida include:

  • Retirement savings
  • Whole life insurance values
  • No limit on the equity in their homestead (if they have lived in it more than 3.3 years)
  • Prepaid college accounts/529 Education accounts

If Chapter 7 does not protect certain vital assets, it may make sense to file Chapter 13, which protects more. It also provides an avenue for the individual or family to restructure their debt and pay it off within a period of time. In either case, the debt need not be paid in full. Consult with an experienced bankruptcy attorney who can analyze your individual assets and situation.

Unrealistic emotions are a mistake

Bankruptcy experts also cite unrealistic emotions as a problem. It often comes in two different forms:

  • Denial: It is common for people to start ignoring bills that they cannot pay, leaving them unopened in a drawer or hiding them from a spouse.
  • Optimism: Some get the bills and tell themselves that a pay raise or new job is just around the corner, so it is best to carry on until that time comes, and they can pay off their debts.

Rebuild rather than flounder

By filing for bankruptcy, the individual or family put an end to an often fruitless struggle. Once client restructures their debt, they can then focus on rebuilding their credit. They can do this by getting secured credit cards, credit building loans, or VA or FHA mortgages two years after filing. It is also worth noting that credit scores start to creep back up after the filing as long as the debtee continues to make payments.

It starts by contacting an attorney

It is better to acknowledge the challenge and meet it head-on. A knowledgeable bankruptcy law attorney can help clients by providing useful financial guidance. They can also make the filing process quick and stress-free. As a rule, the earlier this happens, the faster and easier the financial recovery.

Sandra Day of The Day Law Office has filed over 4,500 consumer bankruptcy cases and offers a free consultation. Call the office and schedule your free consultation today. The office number is 352-200-2382.