MAKING the decision to file bankruptcy can be a painstaking process that most people put off until they realize that they have no other way out of debt.
Unfortunately, however, sometimes people wait to long. When they finally do make the decision to file, they soon realize that they would actually have been better off if they had just acted sooner. Now don’t get me wrong- Of course every situation this different, but keep reading to see the point I’m trying to make.
Take the case of a couple who came to me for bankruptcy help. Five years ago, both husband and wife had at least $50,000 total saved in their 401K plans. They own a home and have 2 children. Their current credit card debts are now over $60,000 and they have not paid in months. Bill collectors are calling them several times a day and are threatening to sue and garnish their wages. But the credit card debts did not accumulate overnight. Just a few years ago, they owed no more than $20,000 on all of them combined so they were still quite manageable.
Wife used to have 2 jobs but got laid off from one of them so their household income went down by at least 30 percent. With the demands of home ownership and raising two children, they were barely making minimum payments on their credit cards when wife was still working two jobs. Now with the reduction in income as a result of losing one job, it became impossible to even pay the minimums. So slowly over the last several years, they started using their credit cards not only to pay for basic living expenses but at times even using them to pay other debts!
Once the credit cards were maxed out, this couple resorted next to borrowing from their 401K plans. As a result, they started taking home even less money as the 401K loan payments were automatically deducted from their paychecks every pay day. This strategy of juggling your debts every month, of course, does not and will not ever work. To get out of debt, you need to stop borrowing. You can never borrow your way out of debt. But a lot of people don’t realize that until they wake up one day and find themselves drowning in a sea of debt. And that’s not a good place to be.
To make a long story short, here they are 5 years later. From $20,000, their credit card debts have now gone up to $60,000. They not only owe more than twice as much as they did just a few years ago but they’ve also used up all their retirement money! Now this couple is already in their 50’s and while they may still have about 15 years left until they retire, I told them that using their retirement money to pay their debts was probably not one of the smartest decisions they’ve made. Your retirement money may be the only asset you have when you retire. It is best to keep it intact for your later years.
As a bankruptcy attorney, I’ve seen people drain their life savings, cash out their 401K’s and IRA’s and sell everything that they’ve worked so hard for once they find themselves in financial hot water. I understand that and realize that as much as possible, they want to avoid having a bankruptcy on their credit record. But the truth of the matter is that in a lot of cases, you really don’t need to lose everything you’ve so hard for. See, filing for bankruptcy protection can often be a good legal strategy to preserve your assets while trying to regain control of your finances. It is needless and unfortunate to lose everything you have before taking action if bankruptcy is in fact the best solution for your situation. Bankruptcy can be your chance for a fresh start, not the end of the world.
If you think that bankruptcy may be eventually unavoidable for you, speak with a knowledgeable and experienced bankruptcy now, not later. Don’t wait until your financial problems are overwhelming before you take action. For a free consultation and debt analysis, call Toll-Free 1 (866) 477-7772. We have offices in Glendale, Cerritos, West Covina, Valencia and Riverside.
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None of the information herein is intended to give legal advice for any specific situation. Atty. Ray Bulaon has successfully helped thousands of clients in getting out of debt. For a free attorney evaluation of your situation, please call Ray Bulaon Law Offices at TOLL FREE 1 (866) 477-7772.
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