When Is It Right (For Me) To File Bankruptcy?

Well over a million people nationally, will file bankruptcy this year. For most people, bankruptcy still works.

Do You Need to File Bankruptcy?

If your finances are interfering with your family, your work, your health, your life—you should call today.

Many times, the answer to this problem is easier than one would expect.

But, you may have trouble accepting your own answer. Why? Because of a misplaced social stigma some people associate with bankruptcy.

Generally, when I meet people for bankruptcy consultations, I always start with the general question of “Do you think you can realistically pay off all your debts within the next two to three years?” If they give me an unqualified “Yes” (and I bring up the fact that they can’t cheat and eat Top Ramen for the next 3 years), then I advise them to pay their debts and wish them well. If they answer “No” then I almost always recommend filing for bankruptcy relief.

It is at this point that the emotional roller coaster starts. On the one hand, the client is overjoyed with the good news … that they will be debt free. They are immediately filled with happiness, and elated with the wonderful news of eliminating the 800 pound gorilla. It’s almost like winning the Lottery! The Kleenex box comes out of my drawer!

But then I see my clients sink into a personal turmoil filled with blame, shame and regret. They are saddened and feel like their efforts never achieve success. They think of themselves as having “failed”. Despite all their hard work, they were not able to keep their word on their financial responsibilities. Their friends, family, and co-workers all seem to make ends meet, but for some reason they cannot. What would their parents or grandparents think? No one ever filed for bankruptcy in those generations!

And so the battle begins. Pride versus happiness versus common sense. The “Debt Free Dream” is whispering into your left ear; and the “Pay Your Debts Shrew” is pleading fervently in your right ear. A war has begun. It’s almost like watching a political debate. But this is real and has much more direct consequences than a couple of politicians. Sometimes the battle is quick, lasting only minutes. Other times, the individual will struggle and vacillate for hours, days, weeks EVEN months. It is this internal debate that is usually the biggest hurdle to making a rational, reasoned, correct decision to file for bankruptcy relief.

Inevitably, most people that need to file end up filing. And unfortunately, those few who will not file voluntarily when I first recommend it are eventually forced to file after a wage garnishment or bank levy. And, by that time, their finances are in even worse shape than when they first came to see me. So, the client who comes to see me usually does file for bankruptcy relief … and the only question is whether they resolve the internal debate immediately and take my advice right away, or wait until their creditors are making their life even more miserable and then ask me to make an emergency filing.

So to put some order, and some sense, into the debate between the responsible choice to seek bankruptcy relief and the self-abuse people sometimes impose on themselves just to avoid the ’embarrassment’ of having filed bankruptcy, here are the “Top Five” Reasons to File Bankruptcy.