Our Ontario personal bankruptcy lawyers were interested to see a recent article in which a fellow attorney gave out the same kind of advice we'd like to give. The San Francisco Chronicle-hosted City Brights blog posted an interview Feb. 16 with a bankruptcy attorney from that city, Jeena Cho. Cho discussed the trend toward higher bankruptcy filings in general, which is true across California and the United States as well as in the Bay Area. But she also made several points about how individuals and married couples should approach bankruptcy that we believe are good advice for just about everyone. Most importantly, Cho said, people considering bankruptcy should act now rather than running through assets or being foreclosed or sued.
Cho's advice to take action is reflected in the thing she says drives her crazy with new clients: finding out they've already run through their retirement savings to pay down their debts. This is upsetting for three reasons, she says. Retirement savings are generally protected from bankruptcy - so people who ended up filing anyway could have saved those assets and still gotten the bankruptcy protections they needed. Furthermore, she said, spending retirement savings takes away the client's ability to retire, which is a problem for older filers. Finally, there's often a tax penalty for early withdrawal of retirement savings, and tax debts are not dischargeable in bankruptcy. That means they've essentially traded a dischargeable debt, like credit card or mortgage bills, for a non-dischargeable one, taking away the protections of bankruptcy.
As West Covina personal bankruptcy attorneys, we also see this situation, and we strongly agree that potential bankruptcy filers should find a better way. As a rule, when people in debt start spending their retirement savings, it's a desperate move - which suggests that they may already be candidates for bankruptcy. That also speaks to Cho's advice to act now. People deep in debt may be reluctant to admit it for fear of being judged, or they may truly not know how deep their debt is because it's emotionally difficult to face. In order to protect yourself and your savings the most, however, it's best to face the problem head-on so you can decide early whether you're a candidate for bankruptcy. Many bankruptcy law firms, including ours, offer free consultations, so you can discuss this with an expert without making a commitment just then.
At Howard Law PC, we encourage people with serious debt problems to call us as soon as they realize they may not be able to pay it back within the next few years. When we take on new clients, we always start by sitting down and going through their assets, debts and income to decide whether they're good candidates for bankruptcy. If they are, our Seal Beach individual bankruptcy lawyers can start them on the process of filing for bankruptcy and getting relief from the creditor phone calls that generally plague people in debt. We guide our clients through the process of deciding which California bankruptcy exemptions best meet their needs and goals, choosing a type of bankruptcy (when possible) and making sure they follow all reporting requirements, protecting their access to the courts.
If you feel overwhelmed by your debt and aren't sure you can ever pay it off, you should call Howard Law for a free consultation on your case and your options. To set up a meeting, send us an email or call 1-800-872-5925 today.