It can be hard to know when it’s the right time to file bankruptcy. But I was blown away by the man who called my law office.
Should I wait until all of my savings are gone to file bankruptcy?, the caller asked.
And he didn’t mean, until my net worth is greatly reduced; he meant, until my bank balance is zero.
One has to admire the resolve of those who propose to pay on debts that they can never repay up to the point where they literally have nothing.
My advice, of course, is “no“. There is no point in making further payments when you can see you’re heading for bankruptcy.
Bankruptcy exemptions allow you to keep a collection of assets necessary for a fresh start. In California, we have exemptions that will even shelter meaningful cash in the bank.
In Chapter 13, you can keep everything you own.
There is not even a requirement that you be destitute or even insolvent to file bankruptcy. You simply need to be willing to play by the rules of the bankruptcy chapter you choose.
Those rules are centered on making full financial disclosure.
When to consider bankruptcy
The short answer is probably now.
If you are reading this, you probably wonder if bankruptcy could help you out of a hole. Instead of wondering, see a bankruptcy lawyer. (I’ll tell you a secret: bankruptcy lawyers don’t bite.)
So often I wish clients had come to me earlier:
- before they borrowed against their retirement to pay credit cards;
- before they took bad home loans that imperil their home;
- before they borrowed from one credit card to pay on another.
The right time to consider bankruptcy is when you suspect that you can’t really repay your debts in full in 3-5 years, on your own.
Or, when the stress of being in debt interferes with your health or your relationships. Or, when you have no reserves should things get worse.
Seeing a bankruptcy lawyer doesn’t commit you to filing. It just arms you with information about what your options are.
Most people who see a good bankruptcy lawyer are surprised that bankruptcy relief is relatively simply and very effective for almost everyone.
Information is power….become more powerful. Figure out if now is the right time to file bankruptcy.