20 Reasons Why Bankruptcy Might Not Be Right For You

Submitted by John T. Orcutt on Tue, 03/22/2022 - 11:46am

20 Reasons Why Bankruptcy Might Not Be Right For You

Introduction:

Believe it or not, the benefits from filing bankruptcy can be described as nothing less than amazing.  Where else can you get rid of debt with basically the stroke of a pen.  It is no exaggeration to say that it works like magic:  Now you owe…POOF! … Now, you don't.

But, not everyone who comes to see us becomes a client.

Here are at least 20 reasons why:

(1) You goal is to keep property listed as collateral for a debt without paying for the debt.

Unbelievable as it may seem to a bankruptcy attorney, every now and then a potential client comes in thinking that he or she can file bankruptcy and keep their house, car, truck or other property without paying for the loan against it. And worse, think it "unfair" that they can't keep the property without paying for it.   For example, you may think that you can, or should be able to, file bankruptcy to get rid of the loan on your house, your car, or your truck and still keep the car, truck or house.

Under the law, that's not going to happen. If that is your goal, filing bankruptcy is not going to help.
 

(2) You can pay all your debts every month without getting deeper in debt.

If you can, if you have the money or income to do so, you should.  And legally, if you don't want to run into the legal consequences of not doing so, you need to.

That said, having enough income or money to pay all your bills does not keep you from filing bankruptcy, but what would be the point. 

The one exception would be where you need to file bankruptcy to buy some time for you to sell or take out a loan to get your hands on the money to do so.
 

(3) You have too little debt to make it worthwhile.

If you have less debt than it would cost to hire a bankruptcy attorney, filing bankruptcy would make no sense.   There is at least one exception to this: Say you don't have enough debt, but you're behind on a car or house loan you can't afford to or don't want to lose.  If absolutely need be, bankruptcy can be used to stop repossession or to stop foreclosure, and to give you more time with catch up on your payments.
 

(4) You still think you can fix "too many bills to pay" by getting your hands on more money or decreasing your expenses.

As long as this is your focus, filing bankruptcy Is not for you, and "bankruptcy" likely will not even cross your mind.

When you have too many bills to pay, you think you're "stuck".  "Filing bankruptcy" never crosses your mind, and besides, the mere utterance of the word brings up negative feelings.  Instead, you think your only options are to get more income, cut back on expenses, take out a loan, or, if you have one, dip into your 401k program.  And as long as you are focused on these things, the word "bankruptcy" will never come to mind.  But, then it does, you will, at some point, realize that bankruptcy kills of debt, and that if it kills off enough debt, you won't need more money and you won't need to cut back on expenses.   Killing off debt is what bankruptcy is all about. But first, you have to realize bankruptcy laws exist and then come to understand that filing bankruptcy is not a "punishment" but rather a "pardon", that the bankruptcy laws were enacted for the purpose of getting good, hard working people, like you, out of debt, so you can get a "fresh start" and a "second chance" at a life you need, free from the stress, worry and sleepless nights caused by having more bills than you can pay.
 

(5) You have too many assets to file.

When we say "too many assets", what we really mean to say is "too much value in assets".  And,  the legal jargon is "value in assets above what is allowed under available exemptions".   Most of our clients don't lose anything they have when they file bankruptcy.  The reason is simple.  When you file bankruptcy, you are allowed to keep any and all property that is covered by available "exemptions".  Exemptions are lists of items and money that is protected under state law from your creditors no matter what.  We apply the same state "exemptions" in bankruptcy.  And, as I said, most of our clients don't lose anything they have because there are enough "state" exemptions to cover their assets.

But there are limits on what you can keep.  As we indicated, these limits are called "exemptions".  Each state has its own set of exemptions.  And, where they apply, there is also some "federal"  exemptions.

There are 2 versions of bankruptcy available to consumers, like yourself.  There is Chapter 7 and there is Chapter 13.  The rules are somewhat different in Chapter 7 and Chapter 13.  Now, let's make one thing clear.  Having too many assets to cover with the exemptions available in your state does not mean you can't file.  It just means that in Chapter 7, you might lose some assets.  However, sometimes this is ok if losing some assets is the price you are willing to pay to get rid of a much greater amount of debt that you need to get rid of.  For example, you might be willing to "sacrifice" $5,000 in assets in a Chapter 7 case if doing so means you can get rid of $10,000 or more in debt you can't afford to pay.  In Chapter 13, even if you have too many assets, you can keep all your assets, but you just have to pay in enough extra money to equal the value of your assets above what can be protected by available exemptions.  For example, if keeping a vehicle worth $5,000 more than what can be protected by "exemptions" and keeping that vehicle is important to you, in Chapter 13, you can keep the vehicle.  You just have to pay into your Chapter 13 plan the extra value above exemptions, in this example: $5,000.
 

(6) You feel too guilty, ashamed or embarrassed to file bankruptcy.

All of us were brought up to pay our bills.  And when we can't it can make us feel guilty, ashamed or embarrassed.  And, many people are ashamed they even ended up with more bills than they can pay, even if it was not their fault (emergencies/lack of understanding/ lack of experience/ job loss / etc.)

The bottom line is If you can't get past these feelings, filing bankruptcy is not for you.

Fortunately for me as a business man, most people get to the point where the need to find a solution outweighs these negative feelings.  And we help with that as best we can.  Without doubt, "living in debt, that's not living".

And on the issue of guilt, for example, here is what we tell people:

Does not paying your creditors make you feel guilty?  Just checking.  Why?  Because, most people want to pay their bills, and because they feel bad when they don't.  Likely, you are no different.  I understand completely. That just means you're honest. 

If you could pay ALL your bills, ALL the time, you would.  No doubt.  But, presumably, you are here because you can't pay ALL your bills, ALL the time, or because the writing is on the wall that it's just a matter of time before you can't.   Think about it.  You have tried everything you could think of to get the bills under control and you wouldn't be here if you didn't feel like you are caught between a "rock and a hard place".  You are here because you need debt relief and because you know that "doing nothing, changes nothing" and you can't just go on like this. 

So, here's a thought. Stop beating yourself up.  It serves no good purpose.  All it does is keep you from getting the help you and your family need.

And, know this: You are not alone, not by a long shot.   We have helped over 72,343 families get the help they needed.  That's what filing bankruptcy is for. Bankruptcy sets you free. And now, it's just your turn.

Besides, you know what happens when you start missing payments.  Your creditors are never going to just give you a pass.  Far from it.  The collection calls alone will drive you insane. 

Still feeling guilty?  Then consider this.  At this point in time, haven't your creditors been paid enough?  In minimum payments alone, you have probably paid back 2 or 3 times what you owed in the first place.

Still feeling guilty?  Then, know this.  You can always go back later and pay your creditors.  Did you know that?  Bankruptcy puts the creditors under control, not you.  After bankruptcy, you won't owe them, and it would be illegal for them to come after you for payment. But there is nothing that says you can't go back and pay them. So, let's do this. For now, let's get you out of debt and back on your feet.  Then, later on, if you still feel guilty, and have extra money laying around, you can always go back and pay your creditors.  In the meantime, you will have the full benefit of your "fresh start" and a second chance at life, without the stress, worry and sleepless nights.

On the issue of shame, here is what we tell people:

Nobody gets in debt on purpose. But that doesn’t keep you from feeling embarrassed, ashamed or humiliated that you have ended up in debt, a place you never imagined possible. You are likely wondering "How could that have ever happened to me?"

Just know this.  You are not alone.  And I should know. I have helped over 70,343 families.

Truth is…everybody suffers setbacks.  That’s just life.  That's just being human. The real shame would be to just sit there and do nothing about it. Do nothing, and one thing is certain. Life WILL pass you by.

Or, you can pick up the phone…right now…and do something about it.  Whether you realize it or not, bankruptcy kills off debt.  Kill off enough debt and you…and your kids… can get back to living.

Don’t want life to pass you by?  Think bankruptcy.

Will you still feel ashamed afterward?  That's a question only you can answer.  If so, you can always go on beating yourself up later.  But with a bunch of your debt gone, at least you won't have to take it out on your family.
 

(7) You are afraid of what other people will say about you or that they will judge you.

Unfortunately, way too many of us worry about what other people will think, and as a result, we don't make certain decisions or take certain actions that might well be best for us, our future, or our families.

There is nothing wrong with this.  Everybody has to be somewhere.   And if you can't get past these limiting thoughts and worries, filing bankruptcy may not be for you.

And, this doesn't even take into account that the mere utterance of the word "bankruptcy", unexplained and undebunked, can throw you into immediate spasm.

So, I guess it comes down to this.  If what other people think about you, and what they think you should and should not be or do, is that important to you, "it is what it is" and your choice clear.  Getting the kind of "fresh start' and a "second chance" that only filing bankruptcy can provide, free from the burden of debt, is not going to work for you. You will simply have to live in debt and bear up under the stress, worry and sleepless nights as best you can.  Naturally, this is not what I want for you, but the bottom line is that I am not YOU.  You are you.  You have to live your own life, even if that means that you have to live "in debt" for the rest of your days.  All I can do is wish you the very best, and hope that, someday soon, you get to the point where you feel comfortable enough to reach out for the kind of help that only filing bankruptcy can provide.

 

(8) At this point, you think that promises credit counselors, debt management, and debt settlement companies make are true.

If you think this, then bankruptcy is definitely not for you.  At least not until you find out for yourself that people who say "Oh, you don't want to file bankruptcy" do not have your best interest in mind and are either overstating what they can do or flat lying to you.  And, how would you know one way or the other.  It's not your area of expertise.  And, not until you find out that these alleged alternatives-to-bankruptcy have none of the power that the Federal bankruptcy laws have.  And not until you find out that all the negative things they say about "bankruptcy" are simply not true. 

Some alternatives-to-bankruptcy may well lower your overall cost.  Some are just scams and don't.  Some will end up leaving you deeper in debt, with nothing to show for it.  Most of them make promises they can't keep,  But, the truth is that none of these alternative can do what only filing bankruptcy can do. They just can't.  And worse still, every one of them leaves your creditors "in charge".  And being "in charge" means the creditors do not have to "play ball" and can, at any time, change their mind and stop "playing ball".  And, with them, there is nothing you can do about it.  That's one of the big differences from bankruptcy.  The Federal Bankruptcy laws put you "in charge", instead of your creditors.  In effect, within the guidelines set by the law, your creditors are told "what's what", whether they like it or not. 

Ultimately, you will have to find out all this for yourself.   All I can say is that "Others promise, but only bankruptcy delivers".  Bankruptcy is the one thing that actually, so to speak, kills off debt.  But, you have to find that for yourself and until you do, bankruptcy will not feel like the option for you.

I just hope that, in the meantime, they don't do too much damage to you, close your mind off completely to the power that comes from "filing bankruptcy", or make things so much worse that not even filing bankruptcy can help.  

My suggestion: Come find out, for FREE, how bankruptcy really works, what bankruptcy really means, and what it can do for you.  Then, if that's still your desire, go ahead and check out the alternatives.   My guess is that you will coming running back to us.

 

(9) You think filing bankruptcy is a "bad" thing.

As long as you think that bankruptcy is a "bad" thing, bankruptcy will never seem like it's a good fit for you.

The really weird thing is that, if you think this, you are not alone.  For whatever reason, everybody starts out with a negative feeling about "bankruptcy".  Who knows why?  As I may have mentioned, the mere utterance of the word "bankruptcy" can throw people into spasm.  It's as if filing bankruptcy were like being sent off to jail, when, in reality, filing bankruptcy is more like getting "pardoned".  Think about is:  Debt is the problem, not bankruptcy.  Bankruptcy is the solution, not the cause of the problem.  Bankruptcy is your "get out of jail free card".

Or perhaps it's because there are no many "myths" about bankruptcy.

It is helps, here is a link to "16 Myths About Bankruptcy". (Just click here)

When you ready to find out how "good", not "bad", bankruptcy really is, when you are ready to find out how bankruptcy really works, when you have worn yourself out exploring all the alternatives that don't work and options that are no longer options, when are ready…we will be here.

 

(10) You are convinced that filing bankruptcy will hurt your credit score.

If you believe this, it will make your think that bankruptcy is not for you. 

But, want to know the truth?   Most people think that filing bankruptcy will hurt their credit.  In fact, there are so sure of it that they don't even ask this question: "Will bankruptcy hurt my credit?".  Instead, they ask: "How long with bankruptcy hurt my credit?"

But, if you think about it, this makes no sense.  Think about it. 

Not paying all your debts all the time and on-time is what hurts your credit, not bankruptcy.  Debt is the enemy, not bankruptcy.  If you had great credit, you wouldn't be coming to see a bankruptcy attorney.  You wouldn't be exploring "bankruptcy".   For most people, by the time you start thinking about bankruptcy, your credit and your credit score is already shot.   The truth:  Bankruptcy is NOT the problem.  It's the solution to the problem.  Not being able to pay ALL your debt ALL the time, with ALL your payments paid "on time"?  That's the killer.  NOT bankruptcy.   Debt is what "kills" your credit and your credit score.  Bankruptcy, by comparison, is what gives you a chance to "resurrect" your credit.  Debt kills your credit.  Bankruptcy "kills" your debt.  Kill off enough debt and you can get back to paying the rest of your debts and bills "on time".  Whether you realize it or not, paying your debts and bills "on time" is the key to a higher credit score and then more credit.

For more on this: (Just click here)

 

(11) Your main goal is to get rid of debts that are "non-dischargeable" under the Federal bankruptcy laws.

Filing bankruptcy gets rid of tons of debt for our clients.  Debts like credit cards, medical bills, personal loans, repo and foreclosure deficiencies, certain marital debts, certain incomes taxes, etc.

However, some debts are off limits and can't be gotten rid of by filing bankruptcy.  Good examples are: (1) Student loans, (2) Income taxes that are less than 3 years old, and (3) Child support.

For example, if you need to get rid of these types of debts to survive, bankruptcy might not be an option.

On the other hand, even if you can't get rid of these "non-dischareable" debts, many times you will have enough other debt, which is "dischargeable", to make filing bankruptcy more than worthwhile.

 

(12) You can't come up with the money to pay a bankruptcy attorney. 

Like everybody else, including you, attorneys can't afford to work for free. 

However, most of the time, when you come to see us, you are still paying at least some money to your creditors each month.  We then have you stop paying those creditors we know we can, so to speak, kill off, and use the money saved to pay us.  If you need to file faster than you  can accumulate enough of this money to pay us, one alternative is to file Chapter 13 (as opposed to Chapter 7).  Unlike most bankruptcy lawyers, if you qualify and most people do, we offer a $0 Money Down program.  Then, as long as you can afford the monthly Chapter 13 plan payments, you are good to go without worrying about how to quickly come up with the money to file bankruptcy under Chapter 7.

On the other hand, for example, if you have no income above what you need to meet your basic monthly need, and you have no one to give you the money to file, you may well not be able to file.

 

(13) You want to get rid of debt you incurred by lying, fraud or illegal activity.

There are many examples.  You took out debt in someone else's name.  You used someone else's social security number. Your debt is a criminal penalty.  You lied on your application for a loan or credit card.

This does not mean that you can't file bankruptcy to get rid of "legal" debt.

It just means that if the reason you filed bankruptcy is to get rid of the debt incurred by lying, fraud or illegal activity, bankruptcy is definitely not the right choice for you.

 

(14) You want to transfer of money or property out of your name without getting anything in return;

It is not ok to just transfer money or property out of your name, unless, in return, you get money or property of equal value, if your intent is to then file bankruptcy.  Doing so is illegal and for good reason.  "Property" is defined to include anything you own other than money (houses, vehicles, possession, etc.)  That money or property could be used to pay your other creditors.  Under the law, these transfers are illegal.  Under the law, they are considered to be "fraudulent transfers".   The 2 exceptions to this are: (1) Where, after you make the transfers, you still have enough value in money or property to pay 100% of your creditors, or (2) Where the transfers occurred more than 2 or 4 years in the past (at least with respect to bankruptcy cases filed in North Carolina)**   (** Time limits will vary from state to state.)

 

(15) You want to pay back your friends and relatives instead of your other creditors.

As a general rule, it is not ok to pay back money owed to friends and relatives prior to filing bankruptcy.  The reason is simple: It is not fair, and therefore not legal, to treat your friends and relatives better than your other creditors.  You may not agree, and I may even agree with you on this, point, but the law is clear.  If you do this, at the very least, the court will demand the money back from these friends and relatives.  In some cases, these kind of payments can constitute enough reason to kick your bankruptcy case out of court, and leave you owing your creditors as if you never filed.

For the record, there are exceptions: (1) If you pay back less than $600 to any one person, or (2) If the payment occurred more than 2 years before the filing of your bankruptcy case**  (**Laws and interpretation of laws will vary from state to state.)

 

(16) You think you can "run up debt" in contemplation of getting rid of it by filing bankruptcy.

For example, you run up your credit cards to take trip, buy things, get elective surgery done, etc., etc. with the clear intent of then getting out from under the debt by fling bankruptcy.  For creditors, this may be difficult to prove.  But, if proven, at the very least, all such debts will be found to be "non-dischargeable".  In more severe cases, it could result in you being kicked out of Bankruptcy Court and told not to ever come back.

If this is what you intend to do, filing bankruptcy would not be right for you.

 

(17) You want to hide an inheritance or want to avoid using the inheritance to help pay your creditors.

An inheritance (some people call it "heir" property), whether you: (1) Have received it or, or (2) Are already "entitled" to it (even though you have not yet received it) because someone has already died, is considered one of your assets.  It must be disclosed as part of your duty to be totally honest and upfront with the Bankruptcy Court.  And, unless it can be protected under one of your state "exemptions" (this list of things you get to keep no matter what), it must be used to pay your creditors.  (Just to be clear, "entitled" generally means that the person from whom you will inherit has already died.  "Entitled" does NOT include your right to inherit from someone who is still alive. If the person is still alive, under the law, you are not yet "entitled" to it.)

If this is your intent to hide the inheritance or to keep it from being used to pay your creditor (except whatever can be claimed as "exempt"), then filing bankruptcy will not help.

 

(18) You intend to be less than honest and open about everything with the Bankruptcy Court.

Filing bankruptcy can do more for getting you out of debt, putting creditors under control, and giving you a "fresh start" and a "second chance" at life than anything else in the world (except for winning the lottery).  However, the price you pay is complete honesty and openness with the Bankruptcy Court, including full disclosure of all aspects of our financial situation.  This is so important that you will be required to sign "under penalty of perjury" that everything you present in the documents you file with the court and all the information you provide in answer to questions you are asked are "true, correct and complete" to the best of your knowledge and belief.

If it is your intent to be less than fully open and honest and fully forthcoming with the court, then filing bankruptcy is definitely not for you.   And worse, in severe cases, your dishonesty can lead to criminal prosecution.

 

(19) You think borrowing from Peter to pay Paul is the way to go.

Most people "borrow from Peter to pay Paul" in an attempt to stave off getting behind on their bills.  It is the most natural response to "more debts than you can pay".   And for a while it works.  For example, using a new credit card or new loan to pay off older credit cards and loans.  But this strategy only works for a while because, as you know, to make this work, by reason of accumulating interest, you end up getting deeper and deeper in debt.  I am not sure I have ever seen this turn out to be a winning strategy.  It always seems to be like a "kicking the can down road" type of thing.  It only puts off the problem.  It doesn't solve it.  Think about it.  Nobody every got out of debt by borrowing more money.

But, until you realize that borrowing from Peter to pay Paul is more like a "band aid", and not a cure, and only serves to leave you exhausted and out of options and unable to pay everything "on-time", until you see this for yourself...looking into bankruptcy, much less actually filing bankruptcy, will not seem like an option for you

For now, do what you need to do.   In the meantime, just keep this in mind.  When and if you are ready to find out what bankruptcy is, how it works, and why bankruptcy is, or may be, the solution, perhaps the only solution, we will be right here, waiting, ready to answer your questions, to show you how things work, and… even more importantly… to serve you.  Getting people out of debt is what we do.

 

(20) You want to file a second bankruptcy case, but it's too soon since you filed your last bankruptcy case.

This assumes that you already filed a bankruptcy case sometime in the past.   The goal of filing bankruptcy is to get a "discharge".  It is the "discharge" that kills off debt.   However, in order to get a 'discharge' in a second case, the law requires that you wait a certain number of years between filings.

Here is the number of years you must wait between filings: (Just so you know: "Years" are measured from one "filing" date to the next "filing" date.)

Chapter followed by which Chapter  

Years you must wait
 Filing of 7 (discharged)  followed by 7 filing 8
Filing of 13 (discharged) followed by 7 filing 6
Filing of 7 (discharged) followed by 13 filing 4
Filing of 13 (discharged) followed by 13 filing 2
Filing of 13, converted to 7 (discharged)  followed by 13 filing 2
Filing of 7 (dismissed) followed by 7 filing 0*
Filing of 13 (dismissed) followed by 7 filing 0*
Filing of 13 (dismissed) followed by 13 filing 0*
* unless there is a specific court order limiting another filing,  

    

 

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