According to U.S. bankruptcy court statistics, more than 1.5 million people file for bankruptcy every year. Filing for bankruptcy can be a way for individuals or businesses to get a reprieve from financial stress and get a handle on their debts to create a fresh start. That said, it's not appropriate to file for bankruptcy in every single situation. Just because you're struggling to pay what you owe doesn't mean that bankruptcy is a viable or recommended option. That's why it's so important to discuss your choices with a bankruptcy lawyer before taking that step.
If any of the following situations ring true with you, you may want to think twice before filing for bankruptcy right now (or ever).
You probably should not file for bankruptcy if...
- Your debts cannot (or can rarely) be discharged
When you file for bankruptcy, it's important to know that only certain types of debts will be erased. Credit card debts, medical fees, and personal loans are just a few of the types of debts that will typically go away when you file. In contrast, there are some kinds of debts that can never or will rarely be discharged. Student loans, child support or alimony payments, and several kinds of tax debts fall under this category. If these represent the majority of your debts, it won't really be beneficial for you to file for bankruptcy. That said, some extreme cases may still warrant a bankruptcy filing, so it's still important to talk to a lawyer about your specific circumstances.
- You just want collectors to stop hassling you
The stress of owing money can be overwhelming by itself. But when you add in a seemingly endless stream of phone calls from collection agencies, you might feel like you're headed for a nervous breakdown. It's completely understandable that you want these calls to stop. While it's true that filing for bankruptcy will stop those calls, that doesn't mean it's the only way to do so. The Fair Debt Collection Practices Act (or FDCPA) requires collectors to stop contacting you if you ask them to. Yes, it's actually that simple. If you write a certified letter that requests they stop calling you, those collectors cannot contact you - except to tell you they're stopping their efforts or that they're suing you - either at work or at home. Collectors who violate the FDCPA can actually be sued themselves, so it's a good idea to record the calls and voicemails you receive after you make this request. Keep in mind that the FDCPA does not apply to your original lender; only collection agencies have to follow this law. Still, collection agencies are typically a lot more relentless with these calls than lenders are. If you've spoken to a lawyer who has advised against filing for bankruptcy, writing a letter like this can still provide some relief.
- You're expecting a new, large debt in the near future
When you file for bankruptcy, you aren't able to add anything to your list of debts after you submit your petition. In other words, if you're in debt but are currently pregnant or will have other significant medical bills in the near future, you may want to consider waiting to file until after you receive those bills. That way, you can include those debts in your bankruptcy filing. However, you'll have to use caution here. Some people are under the impression that they can go overboard with their spending right before they file; they think that anything they buy and can't pay back will be wiped out. But if the judge or a trustee determines that you bought luxury items or were otherwise irresponsible with your finances close to the date of your filing, some debts might "survive" your bankruptcy. That means you'll still have to pay for those debts even if others are dissolved. As a general rule, you should delay to file if your impending debt is legitimate and not a result of recent decisions that were unwise.
No matter the circumstances of your debt, it's important that work with an experienced law firm to explore your options. To find out more, contact us today.