The Harsh Consequences of Not Filing Bankruptcy Skip to main content

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The Harsh Consequences of Not Filing Bankruptcy


As you are probably well aware, bankruptcy is an important decision that should not be taken lightly. If you are eligible to file but hesitate to do so, you stand to lose more than you may guess. Dithering too long can ruin the strategic advantage of timing; deciding not to file at all could cause you to lose everything.

Take for example your car: if your car is securing a debt and you decide not to file for bankruptcy, a creditor may proceed with repossessing your vehicle. You may think you're ready to lose your car should it come down to repossession, but consider this: the proceeds from the sale of the car undoubtedly will not cover the entire secured debt. This means you've lost your car―and you still owe the difference between the auction sale price and outstanding loan! Bankruptcy allows you to control the situation, by allowing you to safely surrender the vehicle without risking a costly deficiency claim after the car is sold. If you want to keep the car, Chapter 13 allows you to catch up with missed payments, putting you in a better position to keep the car while eliminating the risk of a deficiency claim if you decide later that you can't afford the payments.

If you stand to lose your home, the steps a mortgage company can take won't be as dramatic as waking up one day and finding your car gone. Sure, a foreclosure takes more time, usually at least three months. Still, the possibility of keeping your home is one of the excellent benefits of filing for bankruptcy protection. A solid Chapter 13 plan can catch up your missed payments and stop a foreclosing lender in its tracks.

The sitting duck strategy is pretty terrible for most every kind of debt. There are some debts that a bankruptcy won't discharge, so you may think that declaring bankruptcy won't help you anyway, so why bother. But letting a bad situation spin out of control while you take no action is a recipe for disaster. Take student loans for example, Congress has abolished the statute of limitation for student loans, so you can't just wait those out. If you are delinquent long enough on your student loans, the government could garnish your wages without even going to court. By eliminating other dischargeable debt in your bankruptcy, you can be back on track to start repaying your non-dischargeable student loans.

If you owe money for support obligations, your state may have a program to revoke professional licenses, or worse, a divorce court could even send you to jail. You'll also end up in the slammer if you were ordered to pay money as a result of a criminal proceedings. So now you may be thinking, these all sound pretty scary, but a bankruptcy won't discharge them, so what's the point? Remember that declaring bankruptcy can help you discharge some kinds of debts, freeing money up to pay those not eligible for discharge. This is a heck of a lot better than waiting around for the worst to arrive. If you are in trouble, don't wait: call a bankruptcy attorney and get to work.

With offices in Raleigh, Durham, Wilson and Fayetteville, the Law Offices of John T. Orcutt can help you get a handle on your debt. Call today to set up your free initial consultation: +1-919-646-2654.

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