“Avoid Bankruptcy at All Costs!”
Written by Charleston Bankruptcy Lawyer, Russell A. DeMott
Bankruptcy is a tool that helps you deal with debt. Debt won’t go away by wishing it away. In fact, it just grows and becomes more and more unmanageable.
There are a lot of ways to describe debt. We call it debt, an obligation, or use a big word like liability. I prefer more graphic terms like “ball and chain.”
You’re moving through life and you just seem to be weighed down. You can’t get ahead. You feel weighed down. You’re dragging the ball and chain of debt. It’s your burden.
The big question is this: How do you get rid of it? For many people, they can pay it off over a reasonable amount of time. For others, though, that’s just not possible.
Bankruptcy is a Tool, Not a Dirty Word
There’s a stigma to bankruptcy. It signifies failure for some. But it’s really just a legal tool. Bankruptcy doesn’t cause financial problems; it solves them. What’s interesting to me is that some creditors seem to think bankruptcy caused the person’s financial problems and made it so that the debtor couldn’t repay the creditor. The reality is that most creditors who get their debts discharged weren’t getting paid anyway. Bankruptcy just says, “it’s over” in a legal, formal way and officially wipes out the debt. But it doesn’t cause financial problems any more than a body shop causes car wrecks.
“Avoid Bankruptcy at All Costs”
I read this today and wondered how anyone could write anything so, well, idiotic. “At all costs”? To be sure, no one wants to file bankruptcy. It’s not like winning a gold metal at the Olympics or anything you’d set as a goal in life.
But you need to pay close attention to the costs of not filing bankruptcy. I’ve had clients suffer heart attacks from financial stress–one client had two prior to realizing that bankruptcy was his only realistic option.
I’ve also seen marriages destroyed by financial stress. Is your marriage really just a “cost” you’ll pay to avoid bankruptcy? Is making MasterCard happy really more important than your relationship with your husband or wife? Is it really more important than taking care of your children?
Don’t Get Me Wrong
Don’t get me wrong. I don’t “sell” bankruptcy. I regularly advise clients to avoid bankruptcy–when that advice is appropriate. I’m all for avoiding bankruptcy when it can be avoided. That means when you can put together a reasonable repayment plan to get out of debt in less than a few decades. But I don’t believe in financial suicide missions. And you shouldn’t either.
Keep the Main Thing the Main Thing
The main thing in life is your health, your spouse, your children, and your sanity. All those things are far more important than your 750 credit score–which, by the way, just might have gotten you in the mess you’re in.
Sure, avoid bankruptcy if that makes sense, but never avoid it at all costs!
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I live in Beaufort, SC. I recently spoke with a bankruptcy attorney who quoted me a price of $2500 to file Chapter 7. I don’t have that kind of money. Could you please tell me if that is the going rate or if I have other less expensive options available to me.
Thank you,
Charlotte Hughes
Charlotte,
How much bankruptcy should cost is like asking how much a car should cost. It really depends on what’s needed. There really is no “going rate” for bankruptcy services, and setting such a rate would be an anti-trust violation. You may be able to make payment arrangements with the attorney, but I don’t know anyone who will file a Chapter 7 bankruptcy prior to being paid in full. The attorneys fees would be discharged with all the other debts if not paid prior to filing the bankruptcy.
I wrote a post about this. http://www.scbankruptcyattorney.com/blog/bankruptcy-lawyers-fees-how-much-is-it/2010/01. In short, think of the value you are getting. $2500 is a lot, of course, but how much debt will you be discharging? Paying $2500 and getting the job done right is better than paying $1000 and having someone mess your case up.
–Russ DeMott