There are three major downsides to filing for bankruptcy…
Downside number one is that it’s going to affect your credit. Bankruptcy will be on your credit report for seven to ten years, which is the most significant negative to filing for bankruptcy. However, most of the people who come to me for bankruptcy are not in a position where they have excellent credit.
How I look at it is this: If you have awful credit, what difference does it make if you file for bankruptcy? Yes, it will be on your credit report for seven to 10 years, but how much will affect your situation as far as your interest rates and things of that nature?
Downside number two is that it’s a stressful process. For some people, the stress of the process is one of the reasons they don’t want to do it. They don’t want to talk to a trustee, and they don’t want to have people know their business.
Of course, this is completely understandable, but it’s important to consider how the momentary stress of bankruptcy compares to the long-term stress of living under the burden of enormous debt.
Downside number three is that you may have to pay more than you anticipated. Depending on your financial situation and the assets you want to keep, the initial cost of bankruptcy may be higher than what you were hoping to pay.
Again, this is a completely understandable frustration or concern to have. The best way to work through this is to talk it through with your bankruptcy attorney. That way, you don’t have to fear too many surprises once you decide to file.
Why Bankruptcy Doesn’t Always Work
The thing is, bankruptcy isn’t the right solution for everyone. If you don’t qualify for Chapter 7, you’re going to be put in the Chapter 13 category – and that can be a big problem.
Over the course of my career, I’ve had to admit something to my clients time and time again: I’m probably the worst salesperson for a Chapter 13 bankruptcy. I say this to be funny, but I also say it to be truthful.
Overall, my years of experience have led me to the conclusion that Chapter 13 is incredibly problematic. It’s my strong belief that people need to know all the negatives of it before heading down that road because otherwise, they will be very disappointed.
If you’re going to put the time and effort into filing Chapter 13, you need to be able to make the payments every month. What many fail to recognize is that most people who file Chapter 13 fail more often than they succeed.
Under a Chapter 13 repayment plan, you have to pay your creditors, your attorney, and your court fees every month… and your plan will fail if you miss your payments. That means that if you can’t keep up with the plan that the court gives you, your bankruptcy will get dismissed, and you will not get the relief you needed
This is a huge reason why I have a serious conversation with anyone who is looking to file under Chapter 13. We always talk about what the payment plan might look like, discuss how that number is more likely to go up than it is to go down, and decide whether it’s worth it that any tax refund is likely never to be seen.
In short, I give my clients all the reasons why I don’t like Chapter 13 bankruptcy. If that happens and you tell me, “Okay, I still want to do it,” then great, we’ll get to work. But it’s not uncommon for me to meet someone who is interested in Chapter 13 until we find out what their monthly payment will look like. You’d be surprised how quickly the conversation changes after that point.
Still, it’s possible that someone hears all this and still believes that filing for Chapter 13 is their only way out. In fact, I have had clients for whom I have filed Chapter 13s because I genuinely believe it’s their only way to get out of debt or to save their home. Chapter 13 relief is there for a reason – but you have to use it correctly to get the true benefit.
With the guidance of a skilled attorney for Bankruptcy Law Cases In Florida, you can have the peace of mind that comes with knowing that we’ll make it look easy. For more information on Why Bankruptcy Is Not The Solutions For All Debtors, an initial consultation is your next best step. Get the information and legal answers you seek today by calling (407) 305-5599.